Tailwater Capital acquires Producers Midstream II
for $500m

Tailwater Capital's acquisition of Producers Midstream II aligns with its strategic objective to enhance its midstream energy presence in key U.S. basins. By recapitalizing Producers Midstream, Tailwater aims to bolster its existing partnership and leverage Producers Midstream’s extensive infrastructure assets, including over 3,300 miles of pipeline and approximately 860,000 dedicated acres, primarily in New Mexico, Texas, and Oklahoma. This deal solidifies Tailwater's position as a leading midstream player by providing the necessary capital to fund growth initiatives and operational expansions. The transaction involves a $500 million continuation vehicle managed by Tailwater Capital, anchored by Secondaries at Goldman Sachs Alternatives. Additionally, Producers Midstream expanded its senior secured credit facility from $400 million to $600 million, enhancing its financial flexibility for future development projects. This recapitalization enables Producers Midstream to secure funding for ongoing and planned infrastructure investments, such as the Lea County system, which is expected to be a significant growth driver due to its extensive acreage dedications in the Northern Delaware Basin. From a market perspective, this deal shifts competitive dynamics by consolidating midstream capacity in strategic basins. Producers Midstream’s expanded footprint and financial resources position it more competitively against other midstream operators. The transaction also signals Tailwater Capital's commitment to long-term value creation through disciplined investment strategies, potentially attracting further partnerships and investments from institutional investors. Looking ahead, the primary risks include successful integration of new capital into existing operations and managing potential market volatility in oil and gas prices, which could affect upstream activity levels. Producers Midstream’s ability to execute on planned expansion projects while maintaining operational efficiency will be crucial for sustaining growth. Given its robust asset base and increased financial flexibility, Producers Midstream is well-positioned to capitalize on future opportunities in the midstream sector.