From Houston Business Journal:

A pair of Houston-based energy companies are joining together to buy a Midland-based midstream firm that serves the Permian Basin.

Noble Midstream Partners LP (NYSE: NBLX) and Plains All American Pipeline LP (NYSE: PAA) plan to purchase Advantage Pipeline LLC for $133 million, according to press releases from the companies. The two Houston-based companies will form a 50-50 joint venture with each interest totaling $66.5 million.

The deal is expected to close in the first quarter of this year. Noble is funding its side of the deal with cash on hand, and Plains is funding a majority of its side of the deal with units issued to some of the sellers at closing, according to the releases.

Noble and Plains’ joint venture interest will be held by Trinity River DevCo LP, a 100 percent owned development company, according to a release.

Advantage owns a 70-mile, 16-inch crude oil pipeline in the southern Delaware Basin, per the releases. Built in 2013, the pipeline has a daily shipping capacity of 150,000 barrels to Crane County from Reeves County. The Advantage system also features about 490,000 barrels of combined crude storage at three separate trucking stations in Reeves, Pecos and Crane counties.

Noble plans to operate the pipeline and plans to build a wholly owned 15-mile pipeline to deliver crude to the Advantage Pipeline from its first central gathering facility, according to the releases. Plains expects to build a pipeline to connect its Wolfbone Ranch facility to the Advantage Pipeline near Highway 285.

These two projects are expected to wrap up in the second quarter of this year.

“With this transaction, we are able to provide our sponsor and third-party producers connections to multiple market centers and Plains’ premier pipeline network,” Noble Midstream CEO Terry Gerhart said in a release.

The Permian Basin is mostly in West Texas, but it extends into New Mexico. Its main components are the Midland Basin, the Central Basin Platform and the Delaware Basin. Companies have been increasingly turning to the Permian Basin in recent months, with new rigs being added almost every week and several asset deals reaching nine or 10 figures.

Last month, Plains announced it would buy Alpha Holding Company LLC, the owner of the Alpha Crude Connector system, for more than $1.2 billion. The ACC, which became operational in 2015, is the first large-scale crude oil gathering system in the northern Delaware Basin, according to the sellers.

Also last month, Plains announced it would expand the capacity of its Cactus Pipeline, and BridgeTex Pipeline Company LLC, of which Plains owns 50 percent, announced it would expand its capacity. Both pipelines transport crude from the Permian Basin to the Texas Gulf Coast.


Legal Notice