#USA #Goldman Sachs #Dallas #Tailwater Capital #Producers Midstream

Tailwater Capital's Major Investment for Future Growth

Tailwater Capital LLC has successfully finalized a $1.1 billion capital raise, aimed at recapitalizing its venture with Producers Midstream II, LLC, a key player in midstream solutions based in the Southwest United States. This funding comprises approximately $600 million from an upsized senior credit facility alongside $500 million in equity capital commitments from both new and existing investors, including contributions from the newly established Tailwater Fund V.

Financing Details

The substantial investment is set to bolster Producers Midstream's operations in crucial regions, primarily in New Mexico, Texas, and Oklahoma. The goal is to not only maintain but enhance their service offerings amidst increasing demand for energy infrastructure. Notably, the senior credit facility has been expanded from $400 million to $600 million, facilitated by Texas Capital Bank. This expansion is pivotal in fortifying the company's balance sheet and equipping it with the necessary resources to accelerate growth across its asset base.

Stephen Lipscomb, a Partner at Tailwater Capital, expressed confidence in Producers Midstream by stating, "Tailwater is proud to continue supporting Producers Midstream as they execute on a proven strategy and pursue new opportunities for growth.” Moreover, Matt Flory, the CEO of Producers Midstream, noted, “This capital raise marks a significant milestone for us, enhancing our capacity to serve customers with innovative and flexible solutions."

Producers Midstream's Infrastructure and Growth Plans

Producers Midstream boasts an expansive network of over 3,300 miles of pipeline and approximately 860,000 dedicated acres across several basins. The company's infrastructure includes the Lea County system, anchored by a significant asset pool that is positioned to capitalize on the Northern Delaware Basin's upstream activity.

Recently, Producers Midstream celebrated the start-up of The Dude processing plant, a state-of-the-art facility located in Lea County. Here, they have begun processing and treating natural gas for numerous clients, further solidifying their role in the regional market. With plans to increase processing capacity to 240 MMcfd by Q3 2026, the company aims to meet the growing needs of its customer base effectively. Their strategic initiative also includes enhancing their Palo Duro Pipeline, which spans 300 miles and is integral to delivering gas services across the Data Center Corridor, which is a burgeoning area for data centers from Abilene, TX to Oklahoma.

Advisors and Industry Outlook

In this transaction, Campbell Lutyens served as the exclusive financial advisor, while Kirkland & Ellis LLP provided legal advisorship for Tailwater and Producers Midstream. The investment case represents an important shift for Producers Midstream, enabling them to explore an array of growth opportunities and build upon their already robust operational framework.

The partnership with Goldman Sachs Alternatives, which serves as an anchor investor, further underscores the strong market confidence in both Tailwater Capital’s and Producers Midstream’s strategies. This alliance also highlights the potential for future investments within the growing alternative energy sector, where infrastructure development remains critical.

As Tailwater Capital continues to enhance its portfolio, the successful closure of this financing round not only exemplifies strategic growth management but also reflects a commitment to supporting foundational industries that are vital for the economy’s energy demands. The continued investment in Producers Midstream signals an exciting trajectory ahead, ensuring they remain at the forefront of midstream solutions across key U.S. markets.