Noble Midstream Partners LP and Plains All American Pipeline LP are joining forces to buy a pipeline in Texas. The companies announced Feb. 13 a definitive agreements to form a 50/50 joint venture to acquire Advantage Pipeline LLC, which owns a 70-mile, 16-in. crude oil pipeline located in the southern Delaware Basin.
Constructed in 2013, the Advantage Pipeline has 150,000 barrels of daily shipping capacity from Reeves to Crane County, Texas. The Advantage system also includes approximately 490,000 barrels of combined crude storage at three separate trucking stations in Reeves, Pecos and Crane counties.
“We are excited to expand our Delaware Basin footprint further downstream and establish a partnership with Plains,” said Terry R. Gerhart, CEO of Noble Midstream. “Advantage has created a leading crude transmission pipeline and storage system in the Southern Delaware Basin. With this transaction, we are able to provide our sponsor and third party producers connections to multiple market centers and Plains’ premier pipeline network.”
Plains CEO and chairman Greg Armstrong agreed with Gerhart.
“Plains is pleased to be entering into this strategic partnership with Noble Midstream Partners in a growing area of the Delaware Basin,” Armstrong said. “The Advantage Pipeline provides area producers with more efficient access to multiple markets through interconnections with [Plains’] Permian Basin system.”
The joint venture will acquire Advantage for $133 million, with Noble Midstream’s 50 percent interest totaling $66.5 million. Upon close of the deal, throughput growth on the Advantage Pipeline will be driven by an acreage dedication from Noble Energy Inc. and a volume commitment from Plains Marketing LP.
Noble Midstream will serve as the operator, and will construct a wholly owned 15-mile pipeline to deliver crude oil to the Advantage Pipeline from its first central gathering facility. Plains will construct a pipeline to connect its Wolfbone Ranch facility to the Advantage Pipeline near Highway 285. The connections are estimated to be completed in the second quarter of this year.
Noble Midstream’s joint venture interest will be funded with cash on hand and its undrawn credit facility and will be held by Trinity River DevCo LP, a newly formed, a wholly owned development company. The closing of the transaction is anticipated to occur in the first quarter 2017 and is subject to certain conditions precedent specified in the agreement.Tags: Advantage Pipeline, Delaware Basin, mergers and acquisitions, Noble Midstream, Plains All American Pipeline