Enterprise Settles For A $3.3 Billion Permian Pipeline Operator To Boost Production

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Enterprise Settles For A $3.3 Billion Permian Pipeline Operator To Boost Production

Mon, 01/17/2022 - 10:41
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A man in a business suit offers money (© Shutterstock/Oleksandrum)
A man in a business suit offers money (© Shutterstock/Oleksandrum)

Enterprise Products Partners LP settles on a $3.25 billion cash purchase deal to acquire Navitas Midstream Partners LLC from the mother company Warburg Pincus LLC to boost natural gas processing and pipeline assets in the Permian Basin, the highest shale basin in the world.

The new deal will help the company expand its reach to Midland Basin and part of the Permian to include natural gas liquid and gas processing. According to Enterprise, Midland Basin drilling activity represents approximately 20% of the US’s onshore drilling rigs.

“We do not have a natural gas or NGL presence in the Midland Basin other than downstream pipelines,” Enterprise’s co-chief executive officer, Jim Teague, said in a statement on Monday, January 10, 2022. Teague was referring to the new natural gas capacity, adding that the acquisition would give the company “an entry point.”

The deal comes when most pipeline operators with excess cash are turning to acquisitions and mergers at an increasingly high rate to work around limited growth opportunities through new conduits amid increasing opposition to fossil fuels.

According to Mizuho Securities LLC’s managing director, Gabriel Moreen, the acquisition of Navita’s assets by Enterprise “seems like a strong deal, “adding that the new assets integrate well with Enterprise’s existing gas liquids conduits, which should guarantee their utilization. “For the industry as a whole, it shows consolidation is happening -- slowly but surely.”

The Enterprise’s newly acquired Navita’s assets comprise approximately 1,750 miles (2,816 km) of pipelines and more than a billion cubic feet of gas processing capacity per day, with the Leiker plant in the Midland Basin expected to be operational in the first quarter of 2022.

According to reliable data compiled by Bloomberg, the acquisition deal is termed the largest since 2014 when Enterprise acquired Oiltanking Partners LP for about $4.4 billion.

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