Oil and Gas Pipeline Company Caliber Seeks Sale

Caliber Midstream Partners LP, the owner of an oil and gas pipeline network in North Dakota, is exploring a sale that it hopes could value it at as much as $1 billion, including debt, according to people familiar with the process.

Caliber's owners, private equity firm First Reserve Corp and oil and gas exploration and production company Triangle Petroleum Corporation, have interviewed investment banks in recent weeks about hiring a financial advisor to help run an auction for the company, the people said.

The sources asked not to be identified because the talks are confidential. Asked about the possibility of a sale, Triangle, First Reserve and Caliber declined to comment.

Based in Denver, Colorado, Caliber has more than 250 miles (400 km) of pipelines in McKenzie County, North Dakota. It offers transport and storage to oil and gas producers in the Bakken and Three Forks shale formations.

First Reserve and Triangle created Caliber in 2012 with an initial investment of $100 million. Since then, they have committed an additional $114 million to the joint venture. Triangle, which has a market capitalization of $415 million, has a 28.3 percent stake in Caliber, while First Reserve owns the rest.

Triangle primarily drills and extracts shale oil and natural gas in the Bakken. In addition to Caliber, Triangle owns RockPile Energy Services LLC, an oilfield services company.

Pipeline assets have relatively steady cash flows that do not directly correlate to oil prices, and so have retained much of their value despite the 50 percent drop or so in the price of oil since June 2014.

It is unclear what Triangle would use the proceeds from the sale of Caliber for. It could use the money to pay down debt or purchase more acreage and develop oil and gas wells. Its total debt was $800.1 million as of the end of January.

First Reserve owns Caliber through an energy infrastructure fund that is meant to return money to its investors at a profit.

Triangle is backed by private equity firm Carlyle Group LP's NGP Energy Capital Management LLC, which invested in the company in 2012 through $120 million of convertible notes. The company also sold some shares to NGP in a private placement in 2013. In total, NGP currently owns the equivalent of roughly a third of Triangle's common stock.

Reporting by Mike Stone in New York