Investment funds overseen by Morgan Stanley Energy Partners have completed the transaction to sell Durango Permian to a Kinetik Holdings affiliate.

In addition to contingent payment due upon the successful activation of Durango Permian’s Kings Landing Gas Gathering and Processing Development (“Kings Landing”), consideration for the Durango Permian sale consists of both cash and equity.

Operating in the Permian Basin of southeast New Mexico, Durango Permian is a premier gas collection, processing, and carbon dioxide (“CO2”) sequestration company owned by Durango Midstream.

Funds managed by Morgan Stanley Energy Partners own the bulk of Durango.

Richard Cargile, president, and chief executive officer of Durango stated: “Durango is excited to announce the completion of the sale of its Permian Basin assets to Kinetik. I am very proud of the dedication and tireless efforts of our employees as we have expanded our presence in New Mexico through two acquisitions and multiple growth projects in partnership with Morgan Stanley Energy Partners over the last five years.

“We share in Kinetik’s enthusiasm for the sustained growth potential of Durango’s operating region and for the Kings Landing project, which will provide a critical gas processing and treatment solution for the region’s producers. The Company’s assets are complementary to Kinetik’s existing operating footprint, expand Kinetik’s presence in New Mexico, and reinforce Kinetik’s value proposition as a pure-play midstream provider across the entire Delaware Basin. The combination of assets is expected to realise significant operating synergies and capture economies of scale benefits. The base business provides strong stable earnings, and the commissioning of Kings Landing supports significant future growth in the area.”

John Moon, managing director and head of Morgan Stanley Energy Partners added: “Durango Permian was established with the vision of creating a best-in-class gas gathering and processing platform serving leading producers in the Permian Basin. Under the leadership of Rick Cargile and his team, we believe the Company has executed exceptionally well, and they have transformed the business into a leading independent midstream platform in the northern Delaware Basin. In this next chapter for Durango, we are excited to be partnered with Kinetik, which we believe is very well-positioned to capitalise on the substantial growth opportunities in New Mexico.”

Greenhill & Co., a Mizuho affiliate, was Durango Midstream’s principal financial adviser.  Wells Fargo Securities further served as Durango Midstream’s financial and principal technical adviser.  Durango Midstream and Morgan Stanley Energy Partners retained Sidley Austin LLP as their legal counsel.