Issue #7 | Will It Float?

Oilfield Water Weekly

Wednesday May 22, 2019

Rattler Midstream’s highly-anticipated IPO is expected to launch tomorrow morning (Thursday May 23). This NASDAQ listing will create the first publicly-traded pure-play Permian midstream company.

How well will it float?

With a significant water component to their portfolio, Rattler’s public spin-off from Diamondback Energy will be closely watched by oilfield water folks. Rattler has 2.7 MMBbl/d of permitted saltwater disposal capacity and 575,000 Bbl/d of fresh water gathering capacity in addition to O&G midstream assets.

The IPO’s performance could set important precedent for extracting water infrastructure (a critical path function) from E&P operators. The IPO will also be a pivotal datapoint for private equity investments in oilfield water.

So that’s tomorrow…

Looking a bit further down the road… There is now just one month left to wait for the first-ever oilfield water conference devoted entirely to business, market structure, and finance topics.

The executive-geared agenda is final. It is differentiated. And it showcases a star-studded cast of speakers.

Yesterday, we announced the keynote speaker. Peter Bowden is Global Head of Energy Investment Banking at Jefferies, and he has advised on over $200 billion of energy M&A, including some of the most significant midstream deals in the history of the industry.

After Mr. Bowden speaks on “The Water Opportunity,” a steady stream of thought leaders will take the stage to discuss the once-in-a-generation changes happening in the oilfield water business model right now.

We expect this to be a full flight folks. So if you haven’t booked your ticket yet, we encourage you to register today.

And now for this week’s top oilfield water handling headlines…


News Digest

Tomorrow - All Eyes On A Big Midstream Spinco IPO With A Water Component - Will Rattler Float?

Rattler Midstream intends to issue 33.3mm shares on Thursday May 23, priced between $16 and $19. The IPO will be listed on the NASDAQ and trade with the ticker RTLR. A Diamondback subsidiary, Midland-based Rattler serves its parent with midstream services including fresh water sourcing and saltwater gathering and disposal.

Rattler Refresher

Here's a link to the S-1 if you need to prep for tomorrow's big equity float. Some notable, water-related pages: 7 describes the water assets in detail, 103 gives a good oilfield water market primer as do 113-114.

Oilfield Water Connection Announces Keynote Speaker and Agenda for First-of-Its-Kind Conference as Oilfield Water Deal News Surges

We are honored to announce Peter Bowden as the keynote speaker for this conference. Mr. Bowden is the Global Head of Energy Investment Banking at Jefferies. He has advised on over $200 billion of energy M&A, including several of the most significant mergers, acquisitions and joint ventures in midstream energy. Following Mr. Bowden’s address, titled The Water Opportunity, the following group of thought leaders will convey their insights on stage at a defining moment for this sector...

Water, Water Everywhere

An analyst addresses the flood of water deal news...

Texas Pacific Land Trust Sues Activist Shareholder, Delays Trustee Seat Vote

Yesterday, Texas Pacific Land Trust announced that it has filed a lawsuit against activist investor Eric Oliver for violations of federal securities laws in connection with the proxy contest Mr. Oliver initiated to be elected as a trustee of TPL. The Trust also announced that the special meeting of shareholders previously scheduled to be convened on May 22, 2019, and to be adjourned until June 6, 2019, has been postponed until further notice.

Singapore’s GIC Bets on Wastewater Company, Takes WaterBridge Stake at $2.8 Billion Valuation

The big deal to end the week last week came when the Wall Street Journal on Friday reported that Singapore sovereign-wealth fund GIC has bought a stake in WaterBridge Resources LLC in a deal that values the Houston-based handler of oil-drilling wastewater at $2.8 billion including debt.

Five Point Energy Sells WaterBridge Resources Stake

Private equity Five Point Energy LLC said on Friday it had sold its minority stake in midstream water firm WaterBridge Resources LLC to affiliates of Singapore’s sovereign wealth fund, GIC.

Bluefield Analysis Supplements Wall Street Journal WaterBridge Article

"While big investors have flocked to West Texas for its prolific oil wells, they are now scrambling to manage the cruddy water spewing out of the wells at much greater volumes than crude."

NOV CEO: "Steel And Produced Water Don't Get Along Very Well"

Clay Williams said on NOV's recent conference call: "water handling and disposal is an emerging bottleneck in the Permian Basin" because "produced saltwater and steel don't get along well."

Water Is The New Frac Sand! Podcast Addresses Multiple Water Angles [45-Minute Listen]

Kimberly Wurtz, Ball Morse Lowe, PLLC, discusses some of the current water issues in Texas, Oklahoma and New Mexico shale plays. Water is the new frac sand! Wurtz, recently spoke at the Interstate Oil and Gas Compact Commission about oil and water issues recaps her presentation.

Most Agree That Injecting Permian Wastewater Isn’t Going To Get Any Easier… But Is It Getting Harder Yet?

Consensus is building in the Permian around the notion that wastewater injection will become more heavily regulated, limited and challenging in the the near-future. Infill Thinking discusses some recent permitting datapoints in high seismicity areas.

Bloomberg: Frac Water Provider Select Energy Considers a Sale

Kiel Porter at Bloomberg reported on Friday: "The Gainesville, Texas-based company Select Energy Services has spoken to advisers about exploring strategic options, including a potential sale, said the people, who asked to not be identified because the matter isn’t public."

An Oilfield Water Stock Surged Friday Morning On M&A Chatter

Shares of Select Energy Services moved sharply higher last Friday morning after market talk of a potential sale was reported by Bloomberg...

Opening The Floodgates For Produced Water

“If we’re breaking oil production records now in the Permian, it means we’re also breaking records in produced water,” said Bill Brancard, general counsel with Energy, Minerals and Natural Resources. New state law provides that clarity, guaranteeing ownership rights for companies to recycle, reuse and sell produced water. It also establishes jurisdictional authority among regulators.

Planning To Irrigate Arid New Mexico Land With Produced Water

Encore Green Environmental is jockeying to become the first company to recycle oil-and-gas wastewater to irrigate arid lands in New Mexico. The company applied in April for state permits to launch a pilot project near Jal in Lea County.

Research Shows Permian Basin Sinkholes Are Growing

Dr. Zhong Lu, a geophysics professor at SMU, explains that the Permian Basin has a layer of salt below the ground surface and in many instances oil and gas drilling has allowed leaking water to soften that layer and cause the surface to cave in.

In Local West Texas News… This Permian Mini-Documentary Is Worth A Watch

Logistics. Traffic. Infrastructure. Population Growth. Environmental Issues. And Water. If you haven’t seen it yet, a 9-minute Permian oilfield documentary produced by the Dallas WFAA team is worth a watch.

Midstream Partners Find Growth Opportunities As Water Management Complexity Climbs

Water reuse and recycling to find uptake due to their ability to aid in the efficient management of huge volumes of water, finds Frost & Sullivan.

Investing In Water Infrastructure Development: A Conversation With Raul A. Deju, Partner At Brightstar Capital Partners

Private equity firms have the capital to invest in infrastructure – along with deep expertise in consolidating and turning around businesses – so they’re well-positioned to help our American water systems achieve greater efficiency.

Solving A Scientific Mystery And Finding A Solution For Industry

In solving a scientific mystery, researchers from the University of Houston and the nation's national laboratories also discovered a new avenue for clearing toxins from water, including wastewater produced by hydraulic fracturing.

US House Panel Studies E&P Impacts On Water Supplies

Members split along party lines on May 16 as a US House Natural Resources Committee subcommittee considered whether US above-ground and underwater supplies are protected adequately from potentially damaging leaks or spills from onshore oil and gas exploration and production. Democrats felt more federal regulation is needed while Republicans said many states are providing enough oversight already.

Congress, Look At Texas For The Facts On Fracking

John Tintera writes: "Fortunately, every available piece of scientific evidence shows that drilling -- particularly the technique known as hydraulic fracturing, or fracking -- is safe. As a geologist who has spent decades regulating the energy industry, I've seen firsthand the extensive precautions companies take to avoid any accidents and protect our water sources...."

EPA Seeks Public Input On Draft Study Of Oil And Gas Extraction Wastewater Management

The U.S. Environmental Protection Agency (EPA) is seeking public input on a draft study that takes a holistic look at how the agency, states, tribes and others view the current state of regulation and management of wastewater from the oil and gas industry and provides insight into how this wastewater might be returned to beneficial use in the water cycle.

Lawsuit Challenges Trump On Uintah Basin Development

The project is controversial due to its heavy water usage and proximity to the Green River, where delicate fish habitats may be disturbed.

States Aren’t Waiting For Trump On Environmental Protections

More than a dozen states are moving to strengthen environmental protections to combat a range of issues from climate change to water pollution, opening a widening rift between stringent state policies and the Trump administration’s deregulatory agenda.

MGX Minerals Installs Second Oilsands Wastewater Treatment System

MGX Minerals Inc. expects to complete installation of a second wastewater treatment system imminently, with full commissioning of the system on track to be completed by the target date of June 7, 2019.

Bypassing Banks: Three Companies (Including An Oilfield Water Logistics Firm) That Found Alternative Financing Paths

Regulatory changes and new local players increase opportunities for businesses to obtain capital.

US Oil: Occidental’s $56bn Gamble On Finding Value In Shale

A general piece, but worth the read as this E&P deal has big water implications.

Is The Shale Revolution Here To Stay?

Another big picture read, but worth a look the shale primer that it offers.

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