Riley Exploration Permian announced it has sold all membership interests in its subsidiary Dovetail Midstream to Targa Northern Delaware in a transaction valued at approximately $111 million, subject to customary price adjustments. The deal, closed simultaneously with the signing of the agreement, enables the Oklahoma City-based energy group to reduce borrowings under its credit facility while covering tax obligations and transaction costs.
Dovetail Midstream’s assets primarily include natural gas gathering infrastructure located in Eddy County, New Mexico. The company retains the right to receive up to an additional $60 million over a five-year period, contingent on achieving certain volume-based performance thresholds.
Additional infrastructure assets still pending transfer
In addition to the immediate divestment of Dovetail Midstream, Riley Exploration Permian plans to transfer certain compressor station assets to Targa Northern Delaware in a secondary closing expected by the end of the first quarter of 2026. This second transaction is projected to generate $10 million in proceeds, subject to standard closing conditions.
All proceeds from the sales will be directed toward refocusing Riley Permian’s investment on its upstream operations, particularly in the development of newly acquired assets in the region. The company recently expanded its portfolio through the acquisition of Silverback Exploration II and its subsidiaries.
Strategic refocus on production assets
With this divestiture, Riley Exploration Permian continues its strategy of partially exiting midstream infrastructure, which is considered less critical compared to its production goals. The company aims to optimise capital allocation by reinvesting in drilling assets across the Permian Basin.
Chairman and Chief Executive Officer Bobby Riley stated that the agreement meets the company’s objective of securing gas production flow while reducing future capital expenditure related to midstream system expansion. He also highlighted the importance of strengthening collaboration with Targa, described as a best-in-class operator in the sector.
