Rattler Midstream LP owns, operates, develops, and acquires midstream and energy-related infrastructure assets in the Midland and Delaware basins of the Permian Basin. The company operates as a subsidiary of Diamondback Energy, Inc (Diamondback). Rattler Midstream GP LLC operates as the general partner of the company.
The company’s operations are conducted through, and its operating assets are owned by, the Operating Company (Rattler Midstream Operating LLC). As of December 31, 2021, the Holdin...
Rattler Midstream LP owns, operates, develops, and acquires midstream and energy-related infrastructure assets in the Midland and Delaware basins of the Permian Basin. The company operates as a subsidiary of Diamondback Energy, Inc (Diamondback). Rattler Midstream GP LLC operates as the general partner of the company.
The company’s operations are conducted through, and its operating assets are owned by, the Operating Company (Rattler Midstream Operating LLC). As of December 31, 2021, the Holding Company (Rattler Holdings LLC) directly owned a 26% membership interest and 100% of the sole managing membership interest in the Operating Company, while Diamondback (Diamondback Energy, Inc. and its subsidiaries) owned a 74% economic, non-voting interest in the Operating Company.
The company is Diamondback’s primary provider of water-related midstream services (including water sourcing and transportation and produced water gathering and disposal) and a significant provider of long-term crude oil gathering, and as such, are critical to its development plans. The company has long-term acreage dedications, which it refers to as the Acreage Dedications, from Diamondback spanning approximately 450,000 gross acres on Diamondback’s core leasehold in the Permian (approximately 265,000 gross acres in the Midland Basin and approximately 185,000 gross acres in the Delaware Basin). The company entered into commercial agreements with Diamondback in June 2018, effective as of January 1, 2018, which have initial terms ending in 2034.
On October 5, 2021, the company and a private affiliate of an investment fund formed Remuda Midstream Holdings LLC, which it refers to as the WTG joint venture. The Operating Company invested to acquire a 25% interest in the WTG joint venture, which then completed an acquisition of a majority interest in WTG Midstream LLC, or WTG Midstream, from West Texas Gas, Inc. and its affiliates. WTG Midstream’s assets primarily consist of an interconnected gas gathering system and six major gas processing plants servicing the Midland Basin with 925 MMcf/d (million cubic feet of natural gas (MMcf) per day) of total processing capacity with additional gas gathering and processing expansions planned.
On January 19, 2022, the company invested to acquire a 10% interest in BANGL, LLC, which it refers to as the BANGL joint venture. The BANGL pipeline, which began full commercial service in the fourth quarter of 2021, provides NGL (natural gas liquids) takeaway capacity from MPLX and WTG gas processing plants in the Permian Basin to the NGL fractionation hub in Sweeny, Texas and has expansion capacity of up to 300,000 Bbl/d (barrel (Bbl) per day).
On April 30, 2021, the company and its joint venture partner, Amarillo Midstream, LLC, each sold its respective 50% interests in Amarillo Rattler, LLC, which the company refers to as Amarillo Rattler, to EnLink Midstream Operating, LP.
On November 1, 2021, the company completed the sale of substantially all of its natural gas gathering assets to Brazos Delaware Gas, LLC, an affiliate of Brazos Midstream.
Assets
As of December 31, 2021, the company owned and operated 866 miles of crude oil, sourced water and produced water gathering pipelines on acreage that overlays Diamondback’s core Midland and Delaware Basin development areas. Its water system obtains, stores and distributes sourced water for use in drilling and completion operations and collects flowback and produced water, which the company refers to collectively as produced water, for recycling and disposal. The company’s oil gathering systems transport oil from the infield production batteries to intermediary pipelines. Additionally, it owns equity interests in three long-haul crude oil pipelines and one NGL pipeline that run from the Permian to the Texas Gulf Coast. The company also owns equity interests in third-party operated gathering systems and processing facilities supported by commercial agreements, including acreage dedications with Diamondback and other operators.
The transportation of water and hydrocarbon volumes away from the producing wellhead is paramount to ensuring the efficient operations of a crude oil or natural gas well. To facilitate this transportation, the company’s midstream infrastructure includes a network of gathering pipelines that collect and transport crude oil, sourced water and produced water from Diamondback’s operations in the Midland and Delaware basins. These assets are predominately located in Pecos, Reeves, Ward, Loving, Midland, Howard, Andrews, Martin and Glasscock counties.
Crude Oil Gathering and Transportation Assets
As of December 31, 2021, excluding the assets of the company’s joint ventures, the company’s crude oil gathering system consisted of 159 miles of crude oil pipelines, which have 305,000 Bbl/d of crude oil throughput capacity and 118,000 Bbl of crude oil storage. The company’s crude oil gathering and transportation system is purpose built with firm capacity on intermediary pipelines providing connections to long-haul pipelines that terminate on the Texas Gulf Coast. The company’s crude oil gathered volumes, excluding volumes gathered by its joint ventures, averaged 79 MBbl/d (thousand barrels per day) for the year ended December 31, 2021.
Produced Water Gathering and Disposal Assets
The company owns strategically located produced water gathering pipeline systems spanning a total of 583 miles that connect the overwhelming majority of Diamondback operated crude oil and natural gas wells to its produced water disposal well sites. As of December 31, 2021, the company had a total of 141 produced water disposal wells with an aggregate capacity of 3.5 MMBbl/d located across the Midland and Delaware basins.
Water Sourcing and Distribution Assets
The company’s water sourcing and distribution system, with storage capacity of 75 MMBbl/d, is critical to Diamondback’s completion operations, and obtains, stores and distributes water from sourced water wells from the Capitan Reef formation, Edwards-Trinity, Pecos Alluvium and Rustler aquifers in the Permian. The company’s sourced water system consists of a combination of permanent buried pipelines, portable surface pipelines, produced water treatment facilities and sourced water storage facilities, as well as pumping stations to transport the sourced water throughout the pipeline network.
Investment in Long-Haul Crude Oil and NGL Pipelines
The company owns a 10% equity interest in each of EPIC Crude Holdings LP; Gray Oak Pipeline, LLC; and BANGL, LLC, as well as a 4% equity interest in Wink to Webster Pipeline LLC. The company refers to these joint ventures as the EPIC, Gray Oak, BANGL and Wink to Webster joint ventures, respectively. Its equity interests in these pipeline joint ventures are expected to provide the company with a steady cash flow stream from long-haul crude oil and NGL transportation.
EPIC, which began full operations in April 2020, owns and operates a long-haul crude oil pipeline from the Permian and the Eagle Ford Shale to Corpus Christi, Texas. This pipeline, which the company refers to as the EPIC pipeline, is capable of transporting approximately 600,000 Bbl/d which, with the installation of additional pumps and storage, can be increased to approximately 1,000,000 Bbl/d.
Gray Oak, which also began full operations in April 2020, owns and operates a long-haul crude oil pipeline from the Permian and the Eagle Ford Shale to points along the Texas Gulf Coast, including a marine terminal connection in Corpus Christi, Texas. This pipeline, which the company refers to as the Gray Oak Pipeline, is capable of transporting approximately 900,000 Bbl/d.
BANGL, which began full commercial service in the fourth quarter of 2021, provides NGL takeaway capacity from the MPLX and WTG gas processing plants in the Permian Basin to the NGL fractionation hub in Sweeny, Texas and has expansion capacity of up to 300,000 Bbl/d.
Wink to Webster owns and operates a long-haul crude oil pipeline system with origin points at Wink and Midland in the Permian Basin and delivery points at multiple Houston area locations. The joint venture owns a 71% undivided joint interest in the main pipeline segment between Midland and Houston. The Wink to Webster pipeline’s main segment began interim service operation in the fourth quarter of 2020, and the joint venture is expected to begin full commercial operations in the first quarter of 2022. Upon completion, this pipeline, which the company refers to as the Wink to Webster pipeline, will be capable of transporting approximately 1,500,000 Bbl/d.
Investment in Crude Oil Gathering System
The company owns a 60% equity interest in OMOG JV LLC, a joint venture that owns Reliance Gathering, LLC, which owns and operates an in-basin crude oil gathering and transportation system in the Northern Midland Basin underpinned by long-term transportation agreements. The crude oil gathering and transportation system includes approximately 245 miles of crude oil gathering and regional transportation pipelines and approximately 200,000 barrels of crude oil storage in Midland, Martin, Andrews and Ector counties, Texas. The company refers to this joint venture as the OMOG joint venture. Over 150,000 gross acres in the Northern Midland Basin are dedicated to the system under long-term, fixed-fee agreements, some of which benefit from minimum volume commitments.
Investment in Gas Gathering and Processing System
The company owns a 25% equity interest in the WTG joint venture, which owns a majority interest in WTG Midstream. WTG Midstream has assets primarily consisting of an interconnected gas gathering system and six major gas processing plants servicing the Midland Basin with 925 MMcf/d of total processing capacity with additional gas gathering and processing expansions planned.
Business Strategies
The company’s business strategies are to serve as a significant provider of midstream services for Diamondback; and emphasize providing midstream services under long-term, fixed-fee contracts to avoid direct commodity price exposure and mitigate volatility.
Seasonal Nature of Business
The volumes of condensate produced at the company’s processing facilities fluctuate seasonally, with volumes generally increasing in the winter months and decreasing in the summer months as a result of the physical properties of natural gas and comingled liquids.
Regulation
The company’s operations are subject to the federal Clean Air Act and comparable state and local requirements.
The company also generates solid wastes, including hazardous wastes that are subject to the requirements of the Resource Conservation and Recovery Act, or RCRA, and comparable state statutes.
The company is subject to regulation by the U.S. Department of Transportation under the Hazardous Liquids Pipeline Safety Act of 1979, or HLPSA, and comparable state statutes with respect to design, installation, testing, construction, operation, replacement and management of pipeline facilities.
The company is also subject to the Natural Gas Pipeline Safety Act of 1968, or NGPSA, and the Pipeline Safety Improvement Act of 2002.
In addition, the company is subject to the requirements of OSHA (Federal Occupational Safety and Health Act) and comparable state statutes, whose purpose is to protect the health and safety of workers, both generally and within the pipeline industry. Moreover, the OSHA hazard communication standard, the U.S. Environmental Protection Agency (EPA) community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in the company’s operations and that this information be provided to employees, state and local government authorities and citizens. The company and the entities in which the company owns an interest are also subject to OSHA Process Safety Management regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals.
The company is subject to a number of requirements and must prepare Federal Response Plans to comply. The company must also prepare Risk Management Plans under the regulations promulgated by the EPA to implement the requirements under the federal Clean Air Act to prevent the accidental release of extremely hazardous substances.
The Federal Energy Regulatory Commission’s regulation of crude oil and natural gas pipeline transportation services and natural gas sales in interstate commerce affects certain aspects of the company’s business and the market for its products and services.
The company’s gathering operations are subject to regulation by the Railroad Commission of Texas.
History
The company, a Delaware limited partnership, was founded in 2018. It was incorporated in 2018. The company was formerly known as Rattler Midstream Partners LP and changed its name to Rattler Midstream LP in 2019.
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