Trace Midstream Partners II, a portfolio company of Quantum, has agreed to acquire LM Energy Delaware’s natural gas gathering and transportation assets in the Northern Delaware Basin.
The financial terms of the transaction were not disclosed.
The natural gas infrastructure, situated in Eddy and Lea counties in New Mexico, includes both high and low-pressure gas pipelines along with necessary operational facilities such as compression, dehydration, condensate handling and vapour recovery systems.
LM Energy is currently enhancing the system with the construction of additional compressor stations, new pipelines and a 20in diameter high-pressure transportation pipeline.
These advancements aim to connect the existing system to gas processing facilities near Loving, New Mexico.
Once these projects are completed, the system will span approximately 274km of pipeline and include 12 compressor stations.
It is designed to handle a capacity of 650 million cubic feet per day and is supported by more than 80,000 dedicated acres under long-term, fixed-fee contracts with multiple producers.
Legal representation for the acquisition was provided by Vinson & Elkins for Trace, while Piper Sandler and Kirkland & Ellis represented LM Energy.
Established in 2017 and headquartered in Houston, Trace and its affiliates concentrate on the development and operation of natural gas midstream assets and carbon capture infrastructure throughout North America.
They are backed by more than $420m in equity capital commitments from Quantum, Climate Investment and Trace management.
Trace CEO Josh Weber said: “This acquisition marks a significant milestone for Trace as we enter the Northern Delaware Basin. We are excited to build upon LM Energy’s already well-executed system and track record of success.
“With substantial natural gas midstream constraints across the Northern Delaware, we are committed to expanding LM Energy’s assets and providing additional services for the region’s producers.”
LM Energy CEO Elliot Gerson said: “I am sincerely grateful to our customers, whose success was our tailwind over the last five years. It was very important to us to find a successor who would continue to focus on customer service and facilitate our customers’ growth.
“Trace is an excellent team who we know will execute, and we are excited to watch them take this business to the next level.”
In 2022, Trace divested its previous midstream business, selling its Haynesville assets to Williams and its Mid-Continent assets to Energy Transfer.
The combined transaction value of these sales was approximately $1.5bn.
