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EMG, Laredo to divest midstream unit Medallion to GIP for $1.8bn

EBR Staff Writer Published 03 October 2017

The Energy & Minerals Group (EMG) and Laredo Petroleum have agreed to divest their joint venture Medallion Gathering & Processing to an affiliate of infrastructure fund Global Infrastructure Partners (GIP) for $1.825bn in an all cash-deal.

Medallion operates a 1,287km crude oil gathering and transportation pipeline system Wolfcamp Connector, which is located in the Midland Basin of West Texas. The pipeline system covers six crude oil producing counties in the Permian Basin.

The company also operates Delaware Express crude oil pipeline, a newly-constructed crude oil gathering and transportation system. This pipeline system has been designed to enable high quality producer customers with access to multiple Permian Basin long-haul takeaway pipelines and end-markets.

Both the Midland Basin and Delaware Basin systems will be handled by the same leadership team after the transaction.

GIP chairman and managing partner Adebayo Ogunlesi said: “This acquisition underscores GIP’s long term partnership approach and strategy of investing in superior quality platforms that deliver the highest level of customer service.

“Our extensive experience as an energy infrastructure investor, access to significant capital and operational expertise make GIP uniquely well qualified to acquire Medallion and to build upon the strong foundation started with Randy Lentz, EMG and Laredo.”

Post acquisition, Medallion’s name will be retained and will be managed as a portfolio company of GIP with headquarters in Irving. The deal with GIP will not have any affect on EMG’s ownership of the Medallion Delaware Basin.

Medallion president and CEO Randy Lentz said: “Combining Medallion’s current team and best-in-class service with GIP’s financial strength and commitment to operational excellence will be the catalyst for further expansion of Medallion’s midstream infrastructure in the Permian Basin and ability to provide an even greater level of service to our producer customers.”

GIP will also pay Medallion’s owners with an additional cash consideration associated with its realized profits at the time of its exit.

The proceeds from Medallion sale will be distributed 51% to EMG and 49% to Laredo.

Image: GIP to buy EMG, Laredo’s midstream joint venture. Photo: courtesy of supakitmod/FreeDigitalPhotos.net.