Enterprise Surprises Market with $3.25 Billion Cash Acquisition of Navitas Midstream

Enterprise’s agreement to acquire Warburg-backed Navitas comes as a surprise, analysts say, given Enterprise’s recent capital discussions and messaged preference for downstream.

Enterprise Surprises Market with $3.25 Billion Cash Acquisition of Navitas Midstream

Navitas Midstream’s assets in the Midland Basin include approximately 1,750 miles of pipelines and over 1 Bcf/d of cryogenic natural gas processing capacity with the completion of the Leiker plant expected in first-quarter 2022. Pictured is the construction of the Navitas gas gathering system located in Glasscock, Howard, Martin, Midland, Reagan and Upton counties, Texas. (Source: Navitas Midstream Partners LLC)

Enterprise Products Partners LP agreed on Jan. 10 to acquire Navitas Midstream Partners LLC in a debt-free transaction for $3.25 billion in cash consideration, marking Enterprise’s “surprise” entrance into the Midland Basin.

Backed by Warburg Pincus LLC, Navitas provides natural gas gathering, treating and processing services in the core of the Midland Basin of the Permian. Enterprise’s agreement to acquire the privately held company comes as a surprise, according to analysts with Tudor, Pickering, Holt & Co. (TPH), given Enterprise’s recent capital discussions and messaged preference for downstream.

“While the relatively inexpensive portfolio cost should help mitigate initial market concern, implied DCF yield comes at only a slight premium to standalone EPD metrics and increasing exposure to the wellhead without a clear readthrough to NGL logistics is tough to reconcile with messaged strategy,” the TPH analysts wrote in a research note.

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Emily Patsy

Emily Patsy is the senior managing editor for Hart Energy’s Digital News Group. She's responsible for the daily news flow and also manages the A&D Watch and Energy Pulse weekly newsletters.