NGL Energy acquires water disposal and hauling business

US-based NGL Energy Partners has acquired Oilfield Water Lines (OWL), a water disposal and hauling business, for $168m.

The acquisition expands NGL Energy’s water services business and adds four oil and gas water disposal facilities to its water treatment infrastructure portfolio.

The acquisition also adds around 90,000 barrels per day of additional disposal capacity in the growing Eagle Ford Shale in South Texas.

NGL Water Services senior vice president Jim Winter said that the deal will increase the number of saltwater disposal wells owned by the partnership in the Eagle Ford from six to ten, expanding the company’s disposal service to producers throughout the region.

"In addition, we will operate a fleet of 55 water trucks to further increase the services we can provide producers," Winter added.

NGL anticipates adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) from the transaction to exceed $35m for the full year ending 31 March 2015.

NGL’s agreement with OWL includes a provision whereby the purchase price may increase if certain performance targets are achieved.

If the acquired assets generate an adjusted EBITDA in excess of $40m on a yearly basis during any one of the six months following the acquisition, then the purchase price will increase by six times the amount by which the target is exceeded.

The maximum potential increase to the price under the provision is $60m, NGL said.