Discovery Midstream Holdings II, a Texas-based midstream company, has secured an initial equity commitment of up to $1bn from Stonepeak Infrastructure Partners.
The new investment from Stonepeak will be used by Discovery to go after a suite of midstream opportunities across North America.
The company plans to target midstream assets within private and public ownership structures, at different stages of maturity, and across the hydrocarbon value chain. Included in its plans are natural gas, natural gas liquids, and crude oil midstream assets.
Discovery said that it will focus on situations where the results can be influenced with its expertise in operational and commercial optimization.
The midstream company claimed that its founding partners had profitably invested over $2bn of equity into the midstream sector during their careers, having worked in the past at Discovery Midstream I and Wildcat Midstream Partners and other firms.
Discovery Co-CEO Steven Meisel said: “Discovery could not be more excited to partner with the Stonepeak team, whom we have known for many years. We believe there is significant synergy in combining the complementary expertise of our respective organizations.”
“We believe that now represents a unique and attractive time to invest in the U.S. midstream sector, supported by secular volumetric growth, historically depressed valuations, supportive structural changes in the public markets and limited new capital formation.”
Headquartered in New York, Stonepeak is an infrastructure-focused private equity firm, which has $15bn of assets under management.
Stonepeak senior managing director Jack Howell said: “The Discovery management team has demonstrated a strong track record of successful execution throughout different stages of the cycle, and we are excited to partner with them to pursue what we believe to be a broad set of midstream opportunities.
“We look forward to a productive long-term relationship and could not ask for a better market set-up.”
Last year, Discovery Midstream was sold by TPG Growth to a joint venture formed by KKR and Williams for about $1.2bn.
Founded in 2015, Discovery Midstream has operations in the southern portion of Colorado’s Denver-Julesburg Basin (DJ Basin). Its infrastructure and associated facilities are located across more than 250,000 dedicated acres, mainly in Weld and Adams counties.