In a newly-formed joint venture with Tulsa’s Williams Cos., KKR announced Monday it’s entered into an agreement to make a $1.2 billion purchase of Discovery Midstream from TPG Growth.
Founded 3 years ago and based in Dallas, Discovery operates in the southern part of Colorado’s Denver-Julesburg Basin and its operations are located in more than 250,000 dedicated acres in Weld and Adams counties.
The acquisition is funded primarily through KKR’s energy and infrastructure funds. The Discovery system includes natural gas and crude oil gathering pipelines, cryogenic gas processing, liquids handling and crude oil storage. Once the deal is complete, Williams will operate the system.
The system’s assets include a 60-million cubic feet a day gas processing plant with an additional 200 million cubic feet a day plant that is fully permitted and should be completed by the end of 2018.
“We are excited to partner with Williams in the acquisition of Discovery,” said James Cunningham, Managing Director on KKR’s Energy and Infrastructure team. “The Discovery team has built a strong gathering and processing infrastructure footprint to service growing production in the DJ Basin and Williams is well known as a safe and reliable operator of large-scale G&P systems in the Rockies. ”
Upon close, which is subject to customary closing conditions and expected to occur in the third quarter of 2018, Discovery will be led by its existing management team and Williams’ initial economic contribution and ownership will be 40 percent of the purchase price, while KKR’s initial economic contribution and ownership will be 60 percent of the purchase price. Williams will be the operator of Discovery and will hold a majority of governance voting rights. Williams has committed to fund additional capital as required to bring its economic ownership to 50/50.
“We are pleased to partner with KKR on this outstanding acquisition opportunity,” said Alan Armstrong, Williams’ President and CEO. “As one of the premiere providers of large-scale energy infrastructure with operations across the natural gas value chain, we look forward to serving the Discovery customers in this growing basin with our industry-leading midstream services and working with KKR, whose energy and infrastructure investments and strategic partnerships are well-known and highly regarded.”