Noble Midstream Partners LP (NYSE: NBLX) and Plains All American Pipeline LP (NYSE: PAA) have entered a joint venture (JV) agreement to buy the Advantage Pipeline LLC in the Southern Delaware Basin in a deal totaling $133 million.
Each company will own 50% of the Advantage JV, which runs through Pecos and Ward counties, Texas, to Crane County, Texas. The deal speaks to the intensified midstream activity expected in the Permian as midstream infrastructure companies rush to meet expected demand in the basin.
Noble Midstream will operate the 70-mile, 16-inch crude oil line, which has a capacity of 150,000 barrels per day (Mbbl/d).
Advantage offers access to Plains’ Midland, Texas, crude network and to Magellan Midstream Partners LP’s (NYSE: MMP) Longhorn Pipeline. In fourth-quarter 2016, the line’s throughput was 42 Mbbl/d.
Noble Midstream, an MLP formed by Noble Energy Inc. (NYSE: NBL), said it plans to construct a 15-mile pipeline connecting a central gathering facility in the Southern Delaware to a pump station that is estimated to be operational in second-quarter 2017.
The line, built in 2013, will provide shippers with connections to multiple long-haul origination points with access to the Gulf Coast, Midland, Texas, and Plains’ pipeline network.
The deal continues Plains’ expansion in the Delaware, said Elvira Scotto, an analyst at RBC Capital Markets LLC.
“We view PAA’s acquisition of a 50% interest in the Advantage Pipeline positively, as the newly formed JV will increase PAA’s exposure to the prolific Delaware Basin,” Scotto said, adding the deal will not add to the company’s leverage. “While the press release did not provide any financial information, we suspect PAA paid about 20x EV/EBITDA for its share, consistent with recent Permian Basin transactions.”
Plains said it will construct a pipeline to connect its Wolfbone Ranch facility to the Advantage Pipeline near Highway 285 in West Texas. The connections are estimated to be completed in the second quarter of this year.
The Advantage Pipeline will be contractually supported by an acreage dedication from Noble Energy and a volume commitment from Plains Marketing LP. The amount of acreage was not disclosed.
The Advantage Pipeline includes about 490 Mbbl of combined crude storage at three separate trucking stations.
Advantage’s offload stations are:
- Highway 285 Station, 13 miles south of Pecos, Texas;
- Highway 18 Station, 22 miles south of Monahans, Texas; and
- Crane West Station, 4 miles west of Crane, Texas.
Noble Midstream will purchase its interest with $66.5 million cash on hand and revolving credit. Plains, an MLP, will pay its 50% share by issuing units to certain sellers at closing.
Darren Barbee can be reached at dbarbee@hartenergy.com.
Recommended Reading
Kinder Morgan Exec: Building Pipelines ‘Challenging, but Manageable’
2024-04-05 - Allen Fore, vice president of public affairs for Kinder Morgan, said building anything, from a new road to an ice cream shop, can be tough but dealing with stakeholders up front can move projects along.
Exclusive: ‘Reality Has Hit,’ NatGas Not Just a Bridge Fuel, Landrieu Says
2024-04-11 - The Biden administration's LNG pause is "disappointing" and natural gas is a "solution to energy woes," co-chairs for Natural Allies for a Clean Energy Future Senator Mary Landrieu and Congressman Kendrick Meek told Hart Energy's Jordan Blum at CERAWeek by S&P Global.
Exclusive: The Politics, Realities and Benefits of Natural Gas
2024-04-19 - Replacing just 5% of coal-fired power plants with U.S. LNG — even at average methane and greenhouse-gas emissions intensity — could reduce energy sector emissions by 30% globally, says Chris Treanor, PAGE Coalition executive director.
From Satellites to Regulators, Everyone is Snooping on Oil, Gas
2024-04-10 - From methane taxes to an environmental group’s satellite trained on oil and gas emissions, producers face intense scrutiny, even if the watchers aren’t necessarily interested in solving the problem.
Global Energy Watch: Corpus Christi Earns Designation as America's Top Energy Port
2024-02-06 - The Port of Corpus Christi began operations in 1926. Strategically located near major Texas oil and gas production, the port is now the U.S.’ largest energy export gateway, with the Permian Basin in particular a key beneficiary.