KKR and Williams to Acquire Discovery Midstream for $1.2 Billion
KKR entered into an agreement to acquire Discovery Midstream from TPG Growth for $1.2 billion. The provider of natural gas and oil gathering and natural gas processing services is being bought through a newly formed joint venture with Williams.
The Discovery system includes both natural gas and crude oil gathering pipelines, cryogenic gas processing, liquids handling and crude oil storage. The Discovery assets include a 60 MMcf/d gas processing plant with an additional 200 MMcf/d plant that is fully permitted and under construction. It is expected to be in service by the end of 2018.
Upon closing, which is expected to occur in the third quarter, Discovery will be led by its existing management team, and Williams’ initial economic contribution and ownership will be 40% of the purchase price, while KKR’s initial economic contribution and ownership will be 60%.
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.
“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," said James Cunningham, managing director of KKR’s Energy and Infrastructure team. "This fits well with our long-term focus on partnering with top-tier operators who prioritize operational excellence and stakeholder engagement when working on premier North American midstream infrastructure assets."
The transaction is being funded primarily through KKR’s energy and infrastructure funds.
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