Riverstone Holdings, Goldman Sachs Merchant Banking to Buy Lucid II for $1.6 Billion

Monday Lucid Energy Group announced sale of its subsidiary, Lucid Energy Group II, LLC, to an investment fund jointly controlled by Riverstone Global Energy and Power Fund VI, L.P., and the Merchant Banking Division of The Goldman Sachs Group Inc. for a cash price of $1.6 billion. Riverstone was founded by David Leuschen and Pierre Lapeyre.

The deal closes during first quarter 2018, contingent upon approvals. Under the sale provisions:

  • Lucid II retains its name,
  • the current Lucid II management team retains their jobs,
  • Jefferies LLC provides committed debt financing,
  • Lucid II operates as a Riverstone and Goldman Sachs MBD portfolio company.

Field Assets
Established in December 2015, Lucid II purchased Agave Energy Company on September 1, 2016. Its current significant assets include the Artesia Natural Gas Gathering and Processing System, and the South Carlsbad Natural Gas Gathering and Processing System. The combined systems represent 1,700 miles of natural gas gathering pipeline. They have a processing capacity of 595 million cubic feet per day (MMcf/d). The company has another 200 MMcf/d under construction, scheduled to go online in second quarter 2018.

Lucid II has a strong track record of expansion. It expanded processing capacity on the South Carlsbad System by 750 percent after its acquisition in the Agave purchase by adding 210 miles of natural gas gathering pipeline. It has quadrupled customer commitments related to Artesia and South Carlsbad.

“We have successfully developed a safe and efficient world-class system in an extremely short period of time,” Lucid President and CEO Mike Latchem said in a statement.

Latchem added that the South Carlsbad natural gas field has yet to reach maximum potential. The capital infusion from Goldman Sachs and Riverstone enables Lucid II to further expand operations in the Delaware basin.

For Lucid II’s financial sponsor, EnCap Flatrock Midstream, the deal represents the largest acquisition in its nine years in business. The following Goldman Sachs MBD managed investments participate in Lucid II activities: West Street Capital Partners VII, L.P., West Street Global Infrastructure Partners III, L.P., West Street Energy Partners, L.P.