First Reserve acquires Navigator Energy with $250m equity commitment

First Reserve, the largest global private equity and infrastructure investment firm exclusively focused on energy, has announced the acquisition of Navigator Energy Services, LLC with an equity commitment of up to US$250 million.

Navigator’s initial focus will be the continued development, construction and expansion of the Big Spring Gateway System (BSGS).

Construction of the BSGS project is expected to commence in the first quarter of 2015 to supply crude oil gathering and transportation services to the core of the Midland Basin in Texas. First Reserve believes this area has limited pipeline capacity and attractive well economics that should continue to support production through various commodity environments. In addition, Navigator has long-term, minimum volume commitment contracts with large crude oil marketers and multiple exploration and production companies with drilling programs in the region.

The company expects to leverage its energy industry experience and continue to build on the strong relationships created over the past year with shippers and producers in the region to provide a full suite of midstream services. Upon completion, Navigator is expected to have constructed up to 250 miles of crude gathering pipeline and 140 miles of transportation mainline.

Navigator is led by a management team with a combined total of more than 90 years of experience in the energy industry. John O’Shea, currently Managing Director of Tenaska Capital Management, will lead the Company as CEO. John commented,

“We are privileged to partner with First Reserve who will provide the necessary financial and development resources to assist us in getting BSGS operational during the second half of 2015.”

Matt Vining, Navigator’s VP and Chief Commercial Operator added,

“The relationships that we have developed with the area marketers and producers as we have developed this project are outstanding, and we are very pleased with the market optionality that we can provide operators. We view this new relationship with First Reserve as critical to our long term success and look forward to continuing to expand our system size, scope and number of service offerings.”

Mark Florian, Managing Director and Head of Infrastructure Funds for First Reserve, remarked,

“We are excited to partner with Navigator’s experienced management team on what we believe is a critical project to support long-term oil production in a low-cost region. This type of partnership and contractual structure is emblematic of the brand of investments our infrastructure funds have historically pursued, and we are thrilled to be continuing to expand and diversify our investments in this way in the midstream sector.”