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Tailwater Capital doubles stake in Silver Creek with new $150m investment

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Tailwater Capital has doubled its equity commitment in Silver Creek Midstream, its Texas-based portfolio company from $150m to $300m to help the latter continue with the construction of a 402km long crude gathering system in the Powder River Basin in the US.

The increased equity investment of the Texas-based energy-focused private equity firm will come from Tailwater Energy Fund III (EF-III) and EF-III limited partner co-investors, said Silver Creek Midstream.

The crude oil gathering system to be owned 100% by Silver Creek Midstream will span across the Converse, Campbell, Johnson and Natrona Counties in Wyoming.

Tailwater Capital managing partner Jason Downie said: “We continue to see significant opportunities in Wyoming and are excited to increase our commitment to the Silver Creek team.

“Our successful co-investment capital raise from Energy Fund III limited partners demonstrates our ability to opportunistically scale up our equity commitments to pursue attractive growth prospects.”

Silver Creek Midstream said that with more than 80.4km of existing gathering infrastructure in place to go along with 150,000 dedicated acres, the remaining gathering system and trunklines are likely to be placed into service by February 2019. This, it said will facilitate up to 175,000 barrels per day of capacity.

Silver Creek CEO J. Patrick Barley said: “We believe our crude system provides producers with advantaged takeaway out of the Basin.

“By utilizing the Silver Creek gathering system in combination with the Iron Horse Pipeline, Silver Creek will provide producers, marketers and refiners with maximum optionality as they look to get their crude oil to Guernsey, Wyoming and into multiple downstream markets.”

In February, Silver Creek Midstream signed a deal with Tallgrass Energy Partners to jointly develop the 128km long Iron Horse pipeline to transport crude oil from the Powder River Basin to Guernsey in Wyoming.

The Iron Horse pipeline will connect Silver Creek’s developing gathering system to a new terminal being constructed by Tallgrass Energy Partners in Guernsey. Silver Creek will own a stake of 25% while Tallgrass Energy Partners which expects to invest $150m in the project will own the remaining 75% stake.

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