Enterprise Merchandise Companions L.P. introduced Wednesday an settlement to purchase Delaware Basin participant Piñon Midstream LLC for $950 million in money.
“Piñon Midstream gives pure fuel gathering and treating providers within the core of the prolific jap flank of the Delaware Basin in New Mexico and Texas”, Enterprise stated in an announcement.
Piñon Midstream, an organization of Black Bay Power Capital, owns about 50 miles of pure fuel gathering and redelivery pipelines and 5 three-stage compressor stations. It additionally owns hydrogen sulfide and carbon dioxide treating amenities with a collective capability of 270 million cubic toes a day (MMcfd), with an growth to 450 MMcfd anticipated to be accomplished within the latter half of 2025.
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Houston, Texas-based Enterprise famous it could take over fee-based contracts with long-term quantity commitments underneath the debt-free acquisition.
It might additionally purchase two of the largest and deepest acid fuel injection (AGI) wells within the basin with the transaction. “As a part of this transaction, Enterprise is evaluating places for a 3rd injection properly that might assist as much as 750 MMcf/d of complete treating capability”, the assertion stated.
Enterprise indicated it plans to proceed with Piñon Midstream’s plan to retailer carbon dioxide (CO2) within the two wells. Piñon Midstream, additionally based mostly in Houston, earlier obtained approval from the Power Safety Company for its plan for the everlasting sequestration challenge at its Darkish Horse Treating Facility in Lea County, New Mexico.
“The 2 AGI wells are permitted for a mixed 20 million cubic toes per day of CO2 and hydrogen sulfide injection, which equates to ~250,000 metric tons of CO2 and ~110,000 MT of H2S yearly based mostly on present fuel compositions”, Piñon Midstream stated in a press launch June 18. “These two wells present sequestration redundancy for Delaware Basin operators who use Piñon’s scalable and centralized remedy and sequestration facility to mitigate flaring and unlock priceless drilling stock within the space”.
Enterprise estimates that Piñon Midstream’s space has over 7,500 remaining potential wells with entry to at the very least six geologic manufacturing benches.
“Drilling exercise on this space has typically been restricted as a result of lack of bitter pure fuel treating and acid fuel injection properly capability in addition to the prolonged allowing course of for acid fuel injection wells which might take as much as two years”, it stated.
“We consider the Piñon administration group has developed the premier bitter pure fuel treating system within the Delaware Basin”, stated A.J. Teague, co-chief govt of Enterprise’s common associate, Enterprise Merchandise Holdings LLC. “These belongings speed up our entry into this area by at the very least three or 4 years.
“These belongings are extremely complementary to our midstream vitality system and supply us a superb entry level into the jap flank of the Delaware Basin for us to broaden our pure fuel processing footprint. Our entry will present producers a alternative for dependable and value-added processing providers”.
Teague added, “We consider this acquisition will generate distributable money stream accretion of $0.03 per unit in 2025, our first full 12 months of possession, earlier than contemplating the good thing about any business and working synergies”.
Michael LeBourgeois, managing associate at Black Bay, stated, “Black Bay has a historical past of partnering with gifted entrepreneurs to construct best-in-class companies, similar to Piñon Midstream, and likewise positioning them as strategic acquisition candidates for bigger acquirers in search of development alternatives”.
Enterprise expects to finish the transaction by the tip of the 12 months. It plans to make use of each money available and borrowings to fund the acquisition.
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