Producers Midstream recently doubled the capacity of its gas processing plant at its Lea County, New Mexico, facility. Now the company is poised for even further growth.
The expansion comes as Tailwater Capital announces a $1.1 billion recapitalization of Producers Midstream II. The recapitalization includes $500 million in equity commitments and an upsized $600 million senior secured credit facility.
The continuation vehicle, managed by Tailwater Capital, is anchored by the Secondaries team at Goldman Sachs Alternatives and supported by new and existing Tailwater limited partners. The investment also includes a separate equity commitment from the newly formed Tailwater Fund V and related vehicles.
“We’re excited to continue to support Producers Midstream. It’s a great business, and we’ve partnered with them a long time,” said Stephen Lipscomb, a partner at Tailwater. “They have a lot of great projects in the works.”
He cited growing demand for natural gas and, in the Permian Basin, continued need for additional processing and takeaway capacity.
Matt Flory, chief executive officer of Producers Midstream, said there are new opportunities, especially in the northern Delaware Basin, “where there’s significant room for growth.” The region is very popular with drillers, with a lot of drilling inventory remaining and completed wells offering phenomenal results, he said.
Capital is needed as infrastructure is built out and Producers Midstream continues to expand, he said.
“It’s important for us to keep expanding, to keep pace with producers. We need to show them we’re thinking about their future,” Flory said.
In the near term, he said the company will focus on adding natural gas processing and sour gas treating capacity in an effort to provide those options to producers.
Producers Midstream provides midstream solutions in New Mexico, Texas and Oklahoma. The company operates a diversified system of gathering, processing and long-haul assets across multiple basins, with more than 3,300 miles of pipeline and approximately 860,000 dedicated acres. The platform’s Lea County system is anchored by more than 85,000 acres of long-term dedications.
Most recently, Producers Midstream completed the start-up and commissioning of the Dude processing plant in Lea County and began processing and treating natural gas for customers in the region. The company has plans to expand total processing capacity to 240 million cubic feet per day by the third quarter of 2026.