M&A Report: 3 Pipeline Deals Top August M&A

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The August announcement that Bernhard Capital Partners (BCP) had agreed to acquire New Mexico Gas Company (NMGC) was the largest of three pipeline deals involving a Louisiana buyer, seller or target last month. BCP, a private equity group based in Baton Rouge, will acquire NMGC from Emera Inc. in a deal valued at $1.252 billion, including the assumption of about $500 million in debt. The transaction is subject to approval by the New Mexico Public Regulation Commission and is expected to close in late 2025.

Jeff Jenkins, Founding Partner at BCP, emphasized: “This investment aligns directly with Bernhard Capital’s strategy to invest in infrastructure assets and municipal services that are critical to building more resilient communities.”

The transaction with NMGC follows BPC’s announcements in February 2024 and October 2023, respectively, that its portfolio company, Delta Utilities, would acquire CenterPoint Energy’s natural gas distribution operations in Louisiana and Mississippi, as well as Entergy’s natural gas distribution operations in New Orleans and Baton Rouge.

NMGC maintains more than 12,000 miles of transmission and distribution pipelines and provides service to more than 545,000 commercial, residential and transportation customers. Assuming all three transactions are completed, BPC’s local natural gas distribution companies will serve more than 1.1 million customers.

Since its founding, BCP has invested in nearly 70 companies across 20 platforms, including several utilities, which collectively employ approximately 20,000 people globally.

Also in August, a second Louisiana-based private equity group, Black Bay Energy Capital, agreed to sell its portfolio company, Piñon Midstream, LLC, to Enterprise Products Partners in a debt-free transaction for $950 million in cash. The acquisition will significantly strengthen Enterprise’s presence in the Delaware Basin, particularly in New Mexico and Texas.

Piñon Midstream was established in 2020 with an initial capital investment from Black Bay to provide natural gas gathering and processing services in the core of the eastern flank of the Delaware Basin. The company’s assets include approximately 50 miles of natural gas gathering and re-delivery pipeline, five three-stage compressor stations, and facilities capable of processing 270 million cubic feet per day (MMcf/d) of hydrogen sulfide and carbon dioxide, with an expansion to 450 MMcf/d expected to be completed by the end of 2025. Additionally, Piñon operates two of the largest and deepest sour gas injection (AGI) wells in the basin, with a third well under evaluation that could support up to 750 MMcf/d of total processing capacity. The company’s monitoring, reporting and verification plan for the permanent sequestration of carbon dioxide at the two AGI wells was approved by the EPA in June 2024.

Jim Teague, co-CEO of Enterprise, stated, “We believe the Piñon management team has developed the best sour gas processing system in the Delaware Basin.” The acquisition is expected to accelerate Enterprise’s entry into the region by three to four years and provide a solid platform for future growth.

“Black Bay has a history of partnering with talented entrepreneurs to build best-in-class companies like Piñon Midstream, and position them as strategic acquisition candidates for larger acquirers seeking growth opportunities,” said Michael LeBourgeois, Managing Partner of Black Bay. Sam Scofield, Vice President, added, “The Piñon team has successfully executed on its vision of building and scaling key H₂S and WHAT₂ wastewater treatment infrastructure for operators in the rich Delaware Basin.”

The transaction is expected to close in the fourth quarter of 2024, subject to customary regulatory approvals.

Finally, in a transaction related to Louisiana’s oil and gas industry, Tulsa-based Williams Companies (Williams) has completed the acquisition of an additional 40% stake in Discovery Producer Services LLC, owner of Discovery Pipeline System, based in Larose, Louisiana. The company offers natural gas gathering, processing and marketing services to producers.

The Discovery Pipeline System is a 219-mile gas pipeline stretching from the outer reaches of the continental shelf, specifically Ewing Bank, to the LaRose gas processing plant. Williams previously owned a 60% stake in the pipeline and now paid $170 million for the remaining 40%, valuing Central GOM’s total assets at $425 million.

The Discovery pipeline system includes three main laterals, two of which run to platforms in the Grand Isle and South Timbalier blocks. The Discovery system supports some of the largest and most ambitious production operations in the Gulf of Mexico, including Chevron’s Anchor development and Beacon Offshore Energy Development’s Winterfell Five drilling program. Beacon’s large Shenandoah project is also expected to come online in 2025.

GF Gay Le Breton is a Managing Director of Chaffe & Associates Inc., responsible for the firm’s corporate finance practice. Liam Norton is a corporate finance analyst for the firm. Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC. For more information, visit http://chaffe-associates.com.