Layne Water Midstream Company Profile

Background

Overview

Layne Water Midstream (LWM) is a full-cycle water midstream company specializing in providing comprehensive water management solutions to the oil and gas industry. Established in 2016 as a subsidiary of Layne Christensen Company, LWM focuses on the Delaware and Midland Basins, offering services such as produced water gathering and disposal, source water delivery, and produced water redelivery, treatment, and recycling.

Mission and Vision

LWM's mission is to deliver strategic and reliable water management solutions that enhance upstream development and production for its oil and gas customers. The company envisions becoming a leading provider of responsible and sustainable water infrastructure in the oilfield, addressing the industry's unique water management challenges.

Industry Significance

Operating primarily in the Permian Basin, LWM plays a crucial role in managing the lifecycle of water used in oil and gas operations. By offering efficient water sourcing, transportation, disposal, and recycling services, the company contributes to the economic and environmental sustainability of energy production in the region.

Key Strategic Focus

Core Objectives

Comprehensive Water Management: Provide end-to-end water solutions, including sourcing, transportation, disposal, and recycling, to meet the diverse needs of upstream oil and gas operators.

Sustainability and Efficiency: Implement practices that reduce environmental impact and enhance operational efficiency, aligning with industry standards and regulatory requirements.

Areas of Specialization

Produced Water Management: Design and operate systems for the gathering, disposal, and recycling of produced water, ensuring safe and compliant handling.

Source Water Delivery: Supply non-potable water for drilling and completion activities, utilizing extensive storage and transportation infrastructure.

Key Technologies Utilized

High-Capacity Pipelines: Deploy large-diameter pipelines to transport water efficiently, minimizing truck traffic and associated emissions.

Water Treatment Facilities: Operate facilities for treating and recycling produced water, reducing the need for freshwater and promoting water conservation.

Primary Markets Targeted

Permian Basin Operators: Serve oil and gas producers in the Delaware and Midland Basins, addressing their specific water management needs.

Landowners and Regulatory Bodies: Collaborate with entities like the Texas General Land Office and University Lands to develop and manage water infrastructure on state-owned lands.

Financials and Funding

Funding History

Initial Investment: In April 2019, Post Oak Energy Capital and Genesis Park led a $200 million equity commitment to LWM, acquiring the company from Granite Construction Incorporated.

Subsequent Investment: In July 2019, a new strategic equity partner joined the venture, providing additional capital to support LWM's growth initiatives.

Recent Developments

Divestiture: In July 2024, Post Oak Energy Capital and Genesis Park announced the successful sale of their interests in LWM in an all-cash transaction.

Utilization of Capital

The capital raised was utilized to expand LWM's water infrastructure, including the construction of pipelines, storage facilities, and treatment plants, to enhance service offerings and support the growing needs of upstream oil and gas operators.

Pipeline Development

Key Pipeline Projects

Hermosa Pipeline: A 26-mile, high-capacity water pipeline with 18 delivery points, designed to transport water efficiently across the Delaware Basin.

High-Capacity Water Pipeline: Completed in 2017, this 22-inch diameter pipeline spans over 20 miles, with an initial capacity of 100,000 barrels per day, serving energy producers in the Delaware Basin.

Stages of Development

LWM's pipeline projects have progressed from initial planning and permitting stages to active construction and operation, with ongoing efforts to expand capacity and coverage in response to market demand.

Target Conditions

The pipelines are designed to address the water management needs of oil and gas operations, including the transportation of source water for drilling and the disposal and recycling of produced water.

Anticipated Milestones

Key milestones include the completion of pipeline construction, commissioning of facilities, and the initiation of water delivery services to customers, with timelines aligned to meet the operational requirements of upstream producers.

Technological Platform and Innovation

Proprietary Technologies

Automated Monitoring Systems: Implement electronic automation systems to remotely monitor and control pipeline operations, including storage levels, pressures, and water delivery volumes.

Significant Scientific Methods

Hydrological Studies: Conduct comprehensive studies to define water resources, ensuring sustainable sourcing and compliance with environmental regulations.

Water Treatment Processes: Utilize advanced treatment technologies to recycle produced water, reducing freshwater consumption and minimizing environmental impact.

Leadership Team

Executive Profiles

J. Michael Anderson – Chief Executive Officer

Professional Background: Over 25 years of experience in finance, water, and energy sectors. Founded Layne Water Midstream in 2016.

Key Contributions: Led the establishment and growth of LWM, overseeing strategic direction and operational execution.

Frost Cochran – Managing Director, Post Oak Energy Capital

Professional Background: Established Post Oak Energy Capital in 2006, focusing on investments in the upstream, midstream, and oilfield services sectors.

Key Contributions: Provided strategic guidance and capital support to LWM, facilitating its expansion in the Permian Basin.

Paul Hobby – Partner, Genesis Park

Professional Background: Co-founded Genesis Park in 1999, focusing on lower middle-market buyouts in the southern U.S.

Key Contributions: Supported LWM's growth through investment and strategic oversight.

Leadership Changes

As of July 2024, Post Oak Energy Capital and Genesis Park have divested their interests in LWM, with the company now operating under new ownership.

Competitor Profile

Market Insights and Dynamics

The water midstream sector in the Permian Basin is characterized by increasing demand for efficient and sustainable water management solutions, driven by the expansion of oil and gas operations and regulatory pressures to minimize environmental impact.

Competitor Analysis

H2O Midstream, LLC: Provides integrated water infrastructure solutions, including produced water gathering, disposal, and recycling services.

Sourcenergy: Offers water sourcing, transportation, and disposal services, focusing on operational efficiency and environmental compliance.

WhiteWater: Specializes in water infrastructure development, including pipelines and storage facilities, to support oil and gas production.

Spartan Companies, LLC: Provides water management services, including sourcing, transportation, and disposal, with an emphasis on safety and sustainability.

Strategic Collaborations and Partnerships

University Lands Partnership: In January 2019, LWM, in partnership with H2O Midstream, formed UL Water Midstream LLC to serve as the exclusive preferred water services provider on 167,000 acres in the Delaware Basin.

Operational Insights

LWM's strategic focus on comprehensive water management solutions, coupled with its extensive infrastructure and partnerships, positions it as a significant player in the Permian Basin's water midstream sector.

Strategic Opportunities and Future Directions

Strategic Roadmap

Infrastructure Expansion: Continue to develop and expand water infrastructure to meet the growing needs of upstream oil and gas operators.

Sustainability Initiatives: Enhance water recycling and treatment capabilities to promote environmental sustainability and reduce freshwater consumption.

Market Diversification: Explore opportunities to extend services to other oil and gas producing regions, leveraging existing expertise and infrastructure.

Future Business Directions

LWM aims to solidify its position as a leading provider of responsible and sustainable water infrastructure solutions, focusing on innovation, operational excellence, and strategic partnerships to drive growth and value creation.