Delek Logistics Partners today announced that the previously announced acquisition of 3Bear Delaware Holding – NM, LLC ("3Bear"), an indirect subsidiary of 3Bear Energy, LLC, has been completed. In the Delaware Basin of New Mexico, 3Bear's operations include crude oil and gas gathering, processing, and transportation, as well as water disposal and recycling.
The transaction is estimated to result in an investment multiple of roughly 6.25 times preliminary forecasted 2023 EBITDA, with a total cash consideration of $624.7 million (excluding normal closing adjustments). The transaction is being financed using both cash and debt.
In the Northern Delaware Basin, 3Bear has established a leading crude, gas, and water collecting, processing, and disposal enterprise. 3Bear's holdings include 350,000 dedicated acres as well as long-term fixed price contracts. About 485 miles of pipelines, 88 million cubic feet per day of cryogenic natural gas processing capacity, 120 million barrels of oil storage capacity, and 200 million barrels per day of water disposal capacity make up the asset base. The purchased company will become part of "DKL Delaware Gathering Company, LLC, a newly formed, totally owned subsidiary of Delek Logistics Partners, LP.
"This acquisition substantially increases our third party revenue at DKL, per our stated goals, and allows DKL to become a more diversified and less sponsor dependent entity. Additionally, 3Bear expands our product mix to natural gas and water, which will prove useful to customers within our legacy Permian gathering business.”
-Uzi Yemin, Chairman, President and Chief Executive Officer of Delek Logistics' General Partner
Yemin further added, The geographic diversification into the Delaware Basin provides a broader platform for future growth and includes some of the most prolific acreage in the Permian Basin. Finally, the outlook for strong free cash flow should allow us to rapidly reduce leverage while maintaining our 5% distribution growth target for 2022.