ExxonMobil Corporation XOM and Sunoco Logistics SXL recently announced their decision to form a strategic joint venture (“JV”) by combining their key crude oil midstream assets, mainly in the Permian basin of West Texas. Alongside the transaction, ExxonMobil and its associates will enter into a preferred provider agreement with the JV.
Sunoco, with an 85 percent share, will be majority owner and operator of the JV assets. ExxonMobil will hold the remaining 15 percent.
Sunoco will contribute its Permian Express 1, Permian Express 2 and Permian Longview and Louisiana Access pipelines to the JV. ExxonMobil, for its part, will contribute a Texas-Louisiana pipeline as well as its Pegasus pipeline, which runs from Texas to Illinois.
Part of the Pegasus pipeline is shut down, a result of a rupture in 2013 in Arkansas causing $57 million worth of damage.
With West Texas Intermediate (WTI) and Brent crude currently trading at $44.59 and $45.82 per barrel, respectively, both companies are looking to bolster their cash position.