Oilfield Company Goodnight Midstream Considers Sale or IPO

(Bloomberg) -- Goodnight Midstream LLC, a pipeline operator that helps oil and gas explorers dispose of water used in drilling wells, is considering a sale or initial public offering, according to people familiar with the matter.

The Dallas-based company, which is backed by private equity firm Tailwater Capital, is working with an adviser to evaluate an IPO in 2019, said the people, who asked to not be identified because the matter isn’t public. Goodnight will consider selling should it receive offers valuing it at as much as $2 billion, the people said.

Representatives for Tailwater and Goodnight declined to comment.

Goodnight is one of a number of pipeline companies that are growing rapidly in response to the needs of oil and gas companies in North America that rely on immense amounts of water for hydraulic fracturing. Explorers prefer using pipelines to handle fracking water because they’re cheaper and safer than transportation by truck or rail. Pipelines are also more environmentally friendly.

Waterbridge Resources LLC, another oil and gas wastewater specialist, is considering an IPO in the first half of 2019 that could value it at $1 billion, people familiar with the matter said this month.

Tailwater made an initial commitment to invest as much as $80 million in Goodnight in 2016 to develop water gathering and disposal infrastructure in North Dakota and to fund its expansion into Texas, according to a statement at the time. The company has more than 30 saltwater disposal facilities in North Dakota’s Bakken shale field and in the Permian Basin and Eagle Ford shale fields in Texas, according to its website.

Its customers include ConocoPhillips and Callon Petroleum Co., according to company filings.

Goodnight, led by Chief Executive Officer Patrick Walker, said this month it had boosted its revolving credit line to $420 million from $320 million from lenders including ABN Amro Bank NV and Texas Capital Bancshares Inc. Private companies often line up or expand a credit line ahead of going public to shore up their balance sheets.

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