Midstream provider Lucid Energy Group II, LLC, announced today that subsidiaries of the company have closed on the purchase of certain assets of Agave Energy Company and the acquisition of all outstanding stock of Agave Energy Holdings Inc.
Agave owns and operates natural gas gathering and processing assets in the Delaware Basin of southeastern New Mexico and the Powder River Basin of eastern Wyoming.
Lucid II was formed in December 2015 by the team that leads its predecessor company, Lucid Energy Group, LLC. Lucid I currently operates a large gathering and processing footprint in the Midland Basin, serving more than 30 customers across nine counties in West Texas.
As a result of this transaction, the combined Lucid companies are the largest privately held natural gas processor working in the Permian Basin, with 660 million cubic feet of natural gas processing capacity and more than 3,300 miles of pipeline in operation. Lucid I and Lucid II are supported by equity capital commitments of more than $850 million in the aggregate from EnCap Flatrock Midstream.
Lucid II Growth Plan
Agave’s high-growth assets are located primarily in Eddy and Lea counties in New Mexico and include 280 million cubic feet of natural gas processing capacity, more than 1,300 miles of gas gathering pipeline, and more than 60,000 horsepower of compression. These assets are supported by dedications and volume commitments from several major producers.
Lucid II plans to expand Agave’s pipeline footprint in the Delaware Basin by adding new infrastructure in the near term, including a new 200 MMcf/d cryogenic processing plant at Agave’s Red Hills natural gas processing complex in Lea County. Construction of the new plant has already begun, and Lucid expects to commission the new plant in mid2017.
All of Agave’s approximately 160 employees will remain with the company at closing.
CEO Perspective
“We feel this transaction will assure the continued growth of Agave and its affiliated companies,” said JB Smith, former president and CEO of Agave Energy Holdings, Agave Energy Company, Remuda Energy Transportation, and Rowdy Pipeline. “During the process, Agave shareholders gave careful consideration to the acquiring company and that they remain committed to the communities in which we operate and our employees.
“Our primary growth will be focused in the Delaware Basin, which includes our Artesia and South Carlsbad operating areas, along with expanded nitrogen treating in the Pecos Slope Abo. We feel the combined experience of the Agave and Lucid teams will greatly benefit all producers in Southeast New Mexico, ensuring continued growth in the basin with exceptional efficiencies.”
“This transaction firmly establishes Lucid’s franchise position in the Delaware Basin,” said Mike Latchem, president and CEO of Lucid I and Lucid II. “This is a credit to the outstanding quality of the entire Lucid team and the reputation we have built in the Midland Basin for excellence in execution and customer service. We look forward to working with the existing Agave team in the Delaware Basin, where we will continue to serve some of the nation’s best operators targeting the most prolific reserves in the country.”
