Lucid Energy Group Sells Delaware Basin Based Lucid II

The Lucid Energy Group and EnCap Flatrock Midstream, its financial sponsor, have agreed to accept $1.6 billion to transfer ownership of its Delaware Basin Subsidiary Lucid Energy Group II. The group buying it is made up of Riverstone Global Energy, Riverstone Holdings LLC’s managed investment fund Power Fund VI, L.P., West Street Energy Partners, West Street Global Infrastructure Partners III and West Street Capital Partners VII, all investment funds that are managed by The Goldman Sachs Group’s Merchant Banking Division.┬áRiverstone Holdings was founded in 2000 by David Leuschen (http://www.tuck.dartmouth.edu/news/articles/an-uncommon-energy) and Pierre Lapeyre.

The debt financing Jefferies LLC provided is included in the transaction which is expected to close early in 2018. The deal must get the customary approvals and is subject to standard closing conditions. The company will still be called Lucid II and will be run as a Goldman Sachs MBD and Riverstone portfolio company. Lucid II will retain the Lucid management team in their current roles. The assets included in the deal are the Artesia Natural Gas Gathering and Processing System and South Carlsbad Natural Gas Gathering and Processing System and are located deep in the northern Delaware Basin.

The assets being transferred include 1,700 miles of pipelines for gathering natural gas as well as daily processing capacity of more than 585 million cubic feet. There’s also another 200 MMcf/d that’s under construction. The expanded facilities are scheduled to go into service by mid-2018. The leading independent and supermajor oil and gas producers in the region are served by Lucid II. Together they have dedicated the long-term production volume of around 450,000 acres in southeast New Mexico’s Eddy and Lea counties.

Formed in December 2015, Lucid II purchased Agave Energy Company 6 months later. In under 18 months Lucid II increased their South Carlsbad System processing capacity by 750%. They also increased their natural gas gathering pipeline by about 210 miles. Their Artesia and South Carlsbad systems gained 4 times the customer commitments. Mike Latchem, president and CEO of Lucid, said EnCap Flatrock Midstream played a major role in helping them acquire, expand and optimize their Agave transaction’s assets. The two companies have enjoyed a six-year relationship that’s been very productive.

Latchem explained in a very short time the two companies have developed a world-class system that’s safe and efficient. The company is confident Goldman Sachs MBD and Riverstone have the perfect combination of strategic experience and financial strength it requires to continue to grow at a rapid pace.