Crude, NGL, Natural gas pipeline ownership changing

By Richard Rostad, analyst, Oil & Gas 360

Several Permian midstream assets changed hands today, changing the landscape for producers that are only now seeing relief from the punishing differentials of 2018.

EPIC Midstream, which is building a crude and NGL pipeline transporting production from the Permian to the Gulf, has seen ownership changes in both its in-progress lines. Several major shippers in the line have exercised their options to acquire additional equity in the lines, in deals that will close in February.

Noble Midstream Partners, Altus Midstream and Rattler Midstream have all acquired interest in the crude pipeline, receiving 30%, 15% and 10%, respectively. Noble Midstream also acquired a 15% stake in EPIC’s NGL line.

Noble Midstream reports its total cash equity investment will be about $340 million in the crude line and $172.5 million for the NGL line, implying an overall valuation of $1.15 billion for each project. EPIC currently holds 45% of the crude pipeline and 75% of the NGL line.

The EPIC crude pipeline is on schedule for service in Q3 2019, with full operations in January 2020. EPIC’s NGL line, parts of which are currently transporting crude, will be completed and switched to NGL service in January 2020 as well.

A natural gas pipeline is also changing hands, as First Infrastructure Capital will acquire much of the Agua Blanca line. First Infrastructure will acquire WhiteWater Midstream from Denham Capital and Ridgemont Equity. WhiteWater holds a 60% stake in the Agua Blanca gas pipeline, which transports at least 1.4 Bcf/d from much of the Delaware to major interconnects east of Pecos.

First Infrastructure also separately acquired WPX’s 20% stake in Agua Blanca, further consolidating its ownership of the pipeline.

Natural gas differentials remain high

While the Midland WTI differential has vanished, at least for the moment, the takeaway situation for natural gas is still dire. Natural gas at Waha is currently trading at $1.18/MMBTU below Henry Hub and reached $2.05/MMBTU below Henry Hub in early January. While additional gas infrastructure is on the way, producers are often flaring their gas for lack of takeaway.

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