Surging power demand, mostly driven by artificial intelligence, boosts the appeal of natural gas assets,
while shifting policies spark interest in acquiring struggling renewable energy projects.

Natural gas demand is forecasted by most of our sources to be up and to the right pretty dramatically,
and that anticipated demand pull could create price tailwinds, Patrick McWilliams, partner at NGP
Energy Capital, said at the Mergermarket Private Equity Forum Austin on 7 October.

Dallas-based NGP is seeing valuations in the Haynesville and other gas basins that are reflective of
aggressive pricing assumptions, McWilliams said.

The executive noted that NGP remains cautious around leaning into gas prices, as natural gas demand
forecasts only tell one side of the story and don’t reflect the producers’ ability to respond to price
signals and quickly bring on incremental supply, which is abundant.

McWilliams referred to NGP’s portfolio company Camino Natural Resources, which operates in the
Mid-Continent and has natural gas byproducts. Despite natural gas representing 40% of the company’s
volume stream, the liquid’s revenue contribution is not very much, he said.

We love assets like that because they create a real option around natural gas, which we already own.
We have the ability to accelerate into it when those price signals come to us, McWilliams said.

Reuters reported in January that NGP has appointed RBC Capital Markets to explore a sale of Camino,
with a valuation that is expected to reach about USD 2bn, including debt.

The market’s appetite for natural gas also provides an ideal exit window for thriving midstream natural
gas businesses, said Jeff Eaton, executive VP and partner at Five Point Infrastructure.

In September, Five Point-backed Northwind Midstream was sold to MPLX for USD 2.4bn in cash
consideration, resulting in a reported 3.3x gross return on capital invested for the Houston-based
investment firm.

Northwind provides sour gas gathering, treating, and processing services in Lea County, New Mexico.
“Before we even put a dollar in the ground, we had the facility oversubscribed,” Eaton said.

Five Point has also chosen to extend its hold on natural gas-related companies, as it did with a gas
marketing business that it rolled into a continuation vehicle (CV) that allows it to own the business for
up to another 10 years, he said.

“It was an asset that people didn’t fully understand, thus they weren’t willing to pay what we thought it
was worth, Eaton said, adding that the company was generating 20%-30% yields.

Twin Eagle, a North American energy marketer with a focus on natural gas, is a portfolio company of
Five Point, according to its website.

Tailwater Capital has also chosen to extend its hold on one of its midstream portfolio companies, said
co-founder and Managing Partner Jason Downie.

We own a midstream asset that has some exciting growth opportunities in the Permian Basin, and we
are actively deploying capital to build the additional processing that is required to support our
customers’ drilling activity on the acreage they have dedicated to our system, he said. The asset has the
potential to more than double its throughput, he added.

A day after the Mergermarket event, Tailwater announced the closing of a USD 500m CV for Producers
Midstream II, a provider of midstream solutions in New Mexico, Texas, and Oklahoma. The CV is
anchored by Secondaries at Goldman Sachs Alternatives and supported by new and existing Tailwater
limited partners.

Campbell Lutyens served as exclusive financial advisor to the transaction.

by Tatiana Caress Louder and Carlos Martinez