Deep River Resources Acquires Brininstool Ranch and Ranger Water
Deep River Resources (“DRR”) was founded by a group of oilfield entrepreneurs pursuing water-related service opportunities in the Permian Basin. Having previously deployed over $800M while working in corporate development with a national oilfield service company, DRR identified the water supply & disposal bottlenecks in the Delaware Basin, New Mexico and developed a business strategy to address these needs for targeted oil & gas customers.
DRR’s first acquisition was the 35,000 acre Brininstool Ranch, which essentially functions as an oil & gas industrial park. The Ranch has multiple tenants including energy companies developing new wells as well as other service companies needing close access to these developers. Each of these tenants is obligated to source water and related water disposal from the Ranch – thus, creating an exclusive supply opportunity for its owners. DRR was highly motivated to acquire the Ranch in order to optimize these opportunities which the prior owners had not.
Part and parcel to the Brininstool acquisition, DRR successfully completed the acquisition of Ranger Water, one of the largest producers of fresh water in southeast New Mexico. Through the acquisition of Ranger, DRR gained the ability to supply water to the Ranch and, thus, eliminate the prior relationship the Ranch had with another supplier of trucking water in for the benefit of the committed tenants. DRR also had other oil & gas customer relationships requiring water and was able to facilitate new offtake agreements in advance of closing the acquisition.
PGA worked with DRR to identify its and finance these two transactions and, thus, helped establish DRR as a new, powerful market entrant for water services in the Delaware Basin. Further, PGA conducted a competitive process for access financing and ultimately paired DRR with North Avenue Capital to significantly capitalize both businesses through a very favorably priced USDA-guaranteed loan.