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Dallas private equity firm Tailwater sells natural gas supplier for $423 million

Dallas private equity firm Tailwater Capital is selling a North Texas natural gas supplier to Tulsa’s Williams Companies for $423 million.

Tailwater acquired Houston-based NorTex Midstream in February 2021, shortly after a severe winter storm nearly brought down the Texas electric grid.

According to both Tailwater and Williams, NorTex played a key role in keeping natural gas flowing to heat and power about 380,000 homes during one of the state’s most devastating winter storms. It’s the costliest winter storm on record, with damages totaling nearly $200 billion.

Williams CEO Alan Armstrong described NorTex’s 83 miles of pipelines and storage facilities as “irreplaceable natural gas infrastructure … critical to bridging the gap between limited supplies and periods of peak demand.”

“During the extreme cold of Winter Storm Uri, the NorTex pipeline and storage facilities reliably provided gas to residential customers and electric power plants throughout the entire storm,” Armstrong said.

Tailwater said NorTex saved customers more than $800 million — the equivalent of over $2,100 per household — during the storm. In an analysis afterward, NorTex said it delivered natural gas from its storage facilities at an average cost of $2.50 per 1,000 cubic feet while the market price averaged $164.

Nortex operates what Tailwater characterized as the largest portfolio of non-utility gas storage facilities in North Texas.

“When we partnered with NorTex …, we did so with the conviction that the energy transition would require thermal generation to deliver power at a moment’s notice during periods of renewable intermittency,” Tailwater partner Stephen Lipscomb in a prepared statement.

“That conviction was tested immediately with Winter Storm Uri, and NorTex delivered on its reputation of reliability, flexibility and high-quality solutions for customers,” he added. “We believe the company is better positioned than ever to provide critical, dependable natural gas to power the North Texas market.”

Tailwater manages more than $3.8 billion in assets. It has done more than 100 energy industry transactions totaling over $22 billion.

Williams owns and operates over 30,000 miles of pipelines and handles about 30% of the natural gas used in the U.S. for power generation and heating. Its revenue topped $10 billion last year.

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