Gravity divests water midstream business to Delek Logistics, retains focus on power infrastructure

In a move that underscores a strategic shift in its operational focus, Gravity Oilfield Services Inc. (“Gravity”), a leading provider of energy infrastructure services, has announced the sale of its water midstream business to Delek Logistics Partners, LP. This transaction, seen as a landmark deal in the energy infrastructure sector, enables Gravity to concentrate its resources on its power infrastructure assets, while Delek Logistics bolsters its position in managing water resources in major U.S. basins.

The divestiture involves Gravity’s well-established Gravity Water Midstream division, which has been instrumental in providing services such as water gathering, transportation, recycling, storage, and disposal for the oil and gas sector. These capabilities are central to operations in the Midland Basin in Texas and the Williston Basin in North Dakota.

Why Is Gravity Selling Its Water Midstream Business?

Gravity CEO Rob Rice explained that the decision to sell the water midstream business is part of a broader strategy to streamline the company’s portfolio. The company aims to refocus on critical power infrastructure offerings, which are vital to supporting U.S. oil and natural gas producers. Rice expressed gratitude to the Gravity team for their contributions in building one of the largest water midstream platforms in the industry and highlighted the support of Clearlake Capital Group, which has been Gravity’s investment partner since 2017.

This sale to Delek Logistics Partners, a recognised leader in midstream services, will allow the latter to enhance its footprint in the Midland Basin operations. The acquisition positions Delek Logistics to take advantage of Gravity Water Midstream’s extensive infrastructure network, which includes:

Over 200 miles of permanent pipelines.

46 saltwater disposal (SWD) facilities.

14 freshwater facilities with six million barrels of storage capacity.

These assets create an interconnected water management system that is crucial for supporting the needs of producers in key oil and gas regions.

What Will Gravity Focus On Next?

With the sale of its water midstream assets, Gravity will pivot towards strengthening its power infrastructure capabilities, an area in which it has built a strong reputation. This includes providing power generation services that are essential for sustaining oilfield operations across major U.S. energy-producing basins, including the Bakken, Eagle Ford, SCOOP/STACK, DJ Basin, Haynesville, and Marcellus regions.

By shifting its emphasis to power infrastructure assets, Gravity aims to align with the evolving needs of the energy industry, ensuring that it remains a reliable partner for oil and gas producers. The company’s strategic realignment reflects its adaptability and forward-thinking approach in a dynamic market.

Clearlake Capital’s Role in Gravity’s Success

Clearlake Capital Group, which partnered with Gravity in 2017, played a key role in enabling the company to build its water midstream platform. Clearlake Co-Founder José E. Feliciano and Partner Colin Leonard recognised the hard work of Gravity’s team in achieving significant organic growth. According to Clearlake, the transaction with Delek Logistics marks the culmination of a shared vision to create a top-tier water midstream platform that is both scalable and sustainable.

Feliciano and Leonard emphasised that this sale is a testament to the success of Gravity’s strategy in addressing the needs of producers in the Midland Basin operations and Williston Basin network.

Delek Logistics’ Strategic Expansion

For Delek Logistics Partners, this acquisition represents a strategic step towards expanding its water midstream business. With Gravity’s established infrastructure in place, Delek is well-positioned to scale its operations and deliver enhanced value to its stakeholders. This deal not only solidifies its presence in the Midland and Williston Basins but also underscores the growing importance of efficient water management in the oil and gas sector.

The Bigger Picture: What This Deal Means for Energy Infrastructure

The sale of Gravity’s water midstream business highlights the ongoing evolution within the energy infrastructure sector. As companies adapt to shifting market demands, the focus is increasingly on specialisation and operational efficiency. For Gravity, this means doubling down on power infrastructure assets that serve as the backbone of oilfield operations. For Delek Logistics, it signals an opportunity to lead in water resource management, which is critical to ensuring sustainable production in resource-rich basins.

Industry Experts Weigh In

Analysts believe that this deal aligns with broader trends in the energy industry, where companies are seeking to optimise their portfolios to focus on high-growth areas. The divestiture also underscores the critical role of water management infrastructure in supporting U.S. oil and gas production, particularly in regions like the Midland and Williston Basins.

Legal and Financial Advisors

Gravity received financial advisory support from Piper Sandler & Co, while Vinson & Elkins LLP served as legal counsel. The terms of the deal, including financial specifics, remain undisclosed, but industry insiders anticipate it to be a significant transaction within the midstream sector.