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Tailwater raises $1.1bn to strengthen Producers Midstream and support its expansion

Tailwater Capital secures $600mn in debt and $500mn in equity to recapitalise Producers Midstream II and support infrastructure development in the southern United States.

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Tailwater Capital LLC announced the closing of a combined $1.1bn financing to support the growth of Producers Midstream II, LLC, a midstream operator active in New Mexico, Texas and Oklahoma. The transaction includes an upsized $600mn bank credit facility and $500mn in new equity commitments from both existing and new investors.

New fundraising for continuation fund and affiliated vehicles

The equity injection includes a significant contribution from the newly formed Tailwater Fund V and related vehicles. The transaction is led by a continuation vehicle managed by Tailwater Capital, supported by Secondaries at Goldman Sachs Alternatives. According to Tailwater, these commitments will directly fund the development of existing assets while maintaining operational flexibility across the company’s strategic zones.

The company has simultaneously increased its senior credit facility from $400mn to $600mn. The facility, led by Texas Capital Bank, aims to reinforce Producers Midstream’s financial structure while providing additional flexibility to develop its gathering, processing and transportation infrastructure.

Deployment across Delaware Basin and strategic gas corridors

Producers Midstream operates more than 3,300 miles of pipeline and around 860,000 dedicated acres, including 85,000 acres under long-term dedication on its Lea County system. This system is a key expansion zone, linked to a dense inventory of upstream assets in the northern portion of the Delaware Basin.

The company recently completed the start-up of its “The Dude” processing plant in Lea County, launching natural gas processing for local producers. Thanks to its execution schedule and cost advantages, the plant secured multiple anchor contracts with institutional counterparties.

Targeted expansion along the Abilene-Oklahoma axis

In addition, Producers Midstream owns and operates the 300-mile Palo Duro Pipeline, which connects Abilene (Texas) to Oklahoma. This pipeline is positioned to serve the “data centre corridor”, an area identified for its rising energy needs. Part of the raised capital will be allocated to expand and commercialise the infrastructure to ensure competitive and reliable supply for end users.

Campbell Lutyens acted as exclusive financial advisor for the transaction, while Kirkland & Ellis LLP advised Tailwater on the continuation vehicle and Producers Midstream on the credit facility.

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