LONDON: Riverstone Holdings LLC, the manager of Riverstone Energy Limited (REL), has announced the signing of an agreement for REL to invest in Aleph Midstream S.A., an independent Argentine oil and gas gathering and processing-focused midstream company, in line with REL’s previously-stated modified investment approach.
Aleph has received a US$103 million commitment from funds affiliated to Riverstone (comprising US$100 million from REL and US$3 million from other investors) alongside commitments of US$54 million from Southern Cross Group, US$45 million from Vista Oil & Gas (“Vista”), and approximately US$3 million from the Aleph and Vista management teams, for a total commitment of approximately US$205 million, expected to be deployed over the next 24 months.
Aleph will become the first midstream player focused on providing gathering, processing and evacuation services for oil and gas production of Argentina’s Vaca Muerta shale play, spearheading a new paradigm for the development of this world-class shale play built on the concept of long-term partnerships with upstream-focused producers underpinned by acreage dedication agreements.
Upon closing of the transaction, expected to occur in July 2019, Aleph plans to start funding the construction of infrastructure necessary to provide gathering, processing, and evacuation midstream services to oil and gas producers in Vaca Muerta.
Starting in January 2020, Aleph plans to begin providing certain midstream services to support Vista’s Bajada del Palo Oeste shale development in Vaca Muerta, as well as its existing conventional and future unconventional production in the Neuquina Basin, under a dollar-denominated long-term contract. Aleph is currently negotiating credit facilities which it expects to close within the third quarter of 2019.
Aleph plans to draw upon Riverstone’s successful track record building independent midstream businesses across North America to serve growing production from unconventional developments. Riverstone and its affiliates have a strong track record of safely and profitably developing and managing midstream assets, with an aggregate of US$6.9 billion committed to 23 midstream investments since inception, including recent investments in onshore unconventional-focused gathering and processing assets via its Meritage and Lucid platforms.
Aleph will also leverage the local expertise of Southern Cross Group and Vista. Southern Cross Group is one of the largest and longest-standing Latin America-focused private equity firms, and Vista possesses some of the top operational and technical capabilities in the Neuquina Basin.