Buffett-Backed Fuel Distributor Taps Shale Boom With Wastewater Deal

(Bloomberg) -- Fuel distributor Pilot Flying J bought a controlling stake in a water-hauling company serving three of the busiest American shale fields, the latest deal to be spurred by the growing torrent of liquid waste from the U.S. drilling boom.

Pilot Flying J is expanding its oilfield services unit with the deal for closely held Equipment Transport LLC, according to an emailed statement from the Knoxville, Tennessee-based buyer. Equipment Transport operates about 150 trucks in the Permian, Marcellus and Utica shale plays, serving more than 70 customers. Terms of the purchase weren’t disclosed.

The typical shale well can produce millions of gallons of wastewater, making disposal an increasingly critical and lucrative operation as U.S. drilling accelerates. This month alone, private equity backed water specialists WaterBridge Resources LLC and Goodnight Midstream LLC were said to be considering initial public offerings for more than $1 billion apiece, according to people familiar with the companies.

“The infrastructure is being overwhelmed by the amount of water production,” Shameek Konar, Pilot Flying J’s chief strategy officer, said in a telephone interview.

Better known as the nation’s biggest truck-stop company, Pilot Flying J has been expanding its logistics division to tap into the shale market. The company now runs about 250 water-hauling trucks and 15 wastewater disposal wells, along with 400 trucks to transport crude, according to Konar.

Pilot Flying J bought the stake from Chicago-based private equity firm CIVIC Partners LP, according to the statement. Houlihan Lokey Capital served as financial adviser and Winston & Strawn LLP served as legal adviser to Equipment Transport. Bracewell LLP served as legal adviser to Pilot Flying J.

Warren Buffett’s Berkshire Hathaway Inc. last year bought a 39 percent stake in Pilot Travel Centers LLC, owner of Pilot Flying J, and detailed plans to become its biggest shareholder in 2023.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada

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