Waste Stream Provider BlueJack Receives Millions of Dollars in PE Funding

Dallas-based BlueJack Energy Solutions LLC reported Tuesday it has secured an initial equity commitment of up to $100 million from Energy Spectrum Capital through Energy Spectrum Partners VII LP.

Founded in 2015, BlueJack provides waste stream management solutions, including saltwater transmission and disposal, solids processing and disposal and wastewater recycling, for the oil and gas industry. The company is initially focusing on the Permian, Marcellus and Utica plays.

The $100 million funding will be used to support a combination of greenfield development and the acquisition of existing infrastructure, BlueJack founder, President and CEO Ted Lopez told Rigzone in an email statement.

“We are in a strong financial position and have the ability to rapidly source additional capital depending on specific project needs,” Lopez said. “The funds will also support current project budgets and provide runway for moving quickly on attractive opportunities.”

BlueJack currently operates two saltwater disposal facilities in the Permian’s Midland Basin, which are anchored by contracts with Laredo Petroleum. Under these agreements, Laredo will send a portion of its produced and flowback water production from wells drilled within an area encompassing about 110,000 acres in Glasscock and Reagan counties in West Texas, according to a May 24 press statement from the company.  BlueJack’s Schwinn 5280 facility in Reagan County came into service in February of this year, and its Merida 5280 facility in Glasscock County started operations in April 2016. Both facilities serve oil and gas producers targeting the Spraberry and Wolfcamp formations.

Each facility has permitted capacity of about 25,000 barrels per day. Lopez said both facilities can be easily retrofitted to provide recycling during peak demand, doubling the current capacity. This would likely be the company’s first approach to meeting additional demand in a more active drilling environment, Lopez said.

“Every project demands a unique solution and we are capable of integrating a variety of facility functionalities, whether it be high recycle focus, solids management, or enhancing oil recovery while minimizing specific constituents of concern, including bacteria or metals,” Lopez explained.

The company is in discussions with a number of public and private companies, and expects to sign contracts with a number of major companies in the Permian prior to year-end, Lopez said. Despite the shift in the commodities price environment, the opportunity for large-scale development of waste stream management and supply-side infrastructure continues to grow and expand, Lopez said in a May 24 press statement.

“By volume, E&Ps move more water than they do oil and gas, and there is an ongoing need to enhance this segment of the industry in a variety of areas, including environmental stewardship, increased operational efficiency, and cost reduction through automation and ultimately vertical integration of disposal service, recycle capability and pipeline gathering systems, which much of the existing network of solutions currently lacks,” Lopez explained.

Lopez said that the company’s people are the underlying differentiator in the company’s business model versus companies in a similar line of work. The company also stands out because it does not prescribe to any particular boxed solution mindset. BlueJack’s management and advisory team has more than 100 years of experience combined in the industry.

“Unlike many other equity-backed teams in the space, our extensive experience in waste stream management started from ground up,” Lopez stated. “Members of our team have managed every aspect of waste stream development from permitting, drilling management, engineering and construction through operations. The formation of our team was very calculated based on this criteria.”

Since its founding in 1996, Energy Spectrum Capital has raised over $3.5 billion of equity capital from corporate and public pension funds, insurance companies, endowments, banks and other institutional investors.  Partner Mark Honeybone said in the May 24 press statement that the firm “is confident that the management team’s experience and successful track record of delivering oilfield infrastructure and outstanding service provides a strong foundation to build a new company and pursue a multi-basin strategy.”

 

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

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