According to a statement from Western Midstream, the deal will pay Aris investors 0.625 of a share of Western Midstream common stock with an option to receive $25 per share in cash, a 23% premium to Tuesday’s closing price. The company said the cash payments can be prorated, with a maximum of $415 million.
The move allows Western Midstream, whose largest shareholder is Occidental Petroleum Corp., to acquire one of the leading water contractors for the shale industry. Aris operates about 790 miles of pipelines transporting produced water in the Permian Basin — North America’s richest oil-producing region — and is capable of pumping up to 1.8 million barrels of water per day, according to an investor presentation.
With Permian wells producing an average of about five barrels of wastewater for every barrel of crude oil produced, efficient water disposal is a critical part of oil production. The primary method is to transport the water through pipelines and then inject it into underground formations.
According to industry consulting agency Enverus, over the past 15 years, water utilization volumes in all regions of the Permian Basin have increased more than sevenfold, making this area increasingly strategically important for extractive companies.
Source: Bloomberg