Enterprise Products Partners announced several acquisitions with Western Midstream Partners on Feb. 22, days after reports that Occidental Petroleum, which owns Western Midstream, was looking to sell some of its Permian assets.
The deals were debt-free transactions totaling $400 million in cash considerations.
Enterprise announced it bought Western’s 20% interest in Whitethorn, owner of the Midland-to-Sealy segment of Midland-to-ECHO1 crude Texas pipeline, which has a capacity of 620,000 bbl/d. Enterprise also bought Western’s 25% interest in two NGL fractionators located in Mont Belvieu, Texas.
The acquisitions were completed and funded for $375 million on Feb. 16 using cash on hand and proceeds raised from the issuance of short-term notes.
“We are pleased to complete these transactions to consolidate ownership in these midstream assets,” said Jim Teague, co-CEO of Enterprise’s general partner. “The pipeline asset serves the prolific Permian Basin, and the fractionation assets are integral to our NGL system. These transactions are immediately accretive to Enterprise’s distributable cash flow per unit.”
The moves are part of Occidental’s adjustment following the acquisition of CrownRock announced in December. Analysts reported that the company could sell part of its midstream portfolio, such as its stake in Western, to help with debt.
Western Midstream has an estimated market value of $20 billion. Occidental has a 49% stake in Western Midstream and controls the company’s operations, according to Reuters.
Occidental’s President and CEO Vicki Hollub indicated during the company’s fourth-quarter earnings call on Feb. 15 that the general demand for assets in the Permian, including assets that are non-core for Occidental, made it an ideal time to sell.
In a separate release, Enterprise announced it will acquire Southwestern’s 15% equity interest in Panola, which owns a 253-mile mixed-NGL line that transports out of processing plants in East Texas. The transaction, which will give Enterprise a 70% stake in Panola, is expected to close in April. Enterprise said the deal is a debt-free transaction for $25 million.