Enterprise Products Partners L.P. (NYSE: EPD) (“Enterprise”) and
Piñon Midstream, LLC (“Piñon Midstream”), a portfolio company of
Black Bay Energy Capital, today announced that Enterprise’s
affiliate has entered into a definitive agreement to acquire Piñon
Midstream in a debt-free transaction for $950 million in cash
consideration. Piñon Midstream provides natural gas gathering and
treating services in the core of the prolific eastern flank of the
Delaware Basin in New Mexico and Texas.
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Piñon Midstream’s assets include approximately 50 miles of
natural gas gathering and redelivery pipelines, five 3-stage
compressor stations, 270 million cubic feet per day (“MMcf/d”) of
existing hydrogen sulfide and carbon dioxide treating facilities
with an expansion to 450 MMcf/d of capacity expected to be
completed in the second half of 2025, and two of the highest
capacity and deepest acid gas injection (“AGI”) wells in the basin.
As part of this transaction, Enterprise is evaluating locations for
a third injection well that would support up to 750 MMcf/d of total
treating capacity.
This business is supported by fee-based contracts with long-term
acreage dedications, including minimum volume commitments.
Additionally, Piñon Midstream’s monitoring, reporting, and
verification (“MRV”) plan for permanent sequestration of carbon
dioxide in its two AGI wells located at its Dark Horse Treating
Facility in Lea County, New Mexico was approved by the
Environmental Protection Agency in June of 2024. This milestone MRV
approval satisfies a major requirement for 45Q tax credit
eligibility.
Enterprise estimates this area of the Delaware Basin, largely
comprised of Lea County, New Mexico and Winkler County, Texas, has
more than 7,500 remaining well locations and has access to at least
six geologic production benches. Drilling activity in this area has
generally been restricted due to the lack of sour natural gas
treating and acid gas injection well capacity as well as the
lengthy permitting process for acid gas injection wells which can
take up to two years.
“We are excited to announce the acquisition of Piñon Midstream,”
said A. J. “Jim” Teague, co-chief executive officer of Enterprise’s
general partner. “We believe the Piñon management team has
developed the premier sour natural gas treating system in the
Delaware Basin. These assets accelerate our entry into this region
by at least three or four years. These assets are highly
complementary to our midstream energy system and provide us an
excellent entry point into the eastern flank of the Delaware Basin
for us to expand our natural gas processing footprint. Our entry
will provide producers a choice for reliable and value-added
processing services.”
“We believe this acquisition will generate distributable cash
flow accretion of $0.03 per unit in 2025, our first full year of
ownership, before considering the benefit of any commercial and
operating synergies,” stated Teague.
“The Piñon team is thrilled to contribute our unique Delaware
Basin gas treating system to Enterprise, a true leader in the
midstream energy business. Our team, and specifically our
incredible field personnel and loyal employees, set out to build
the premier sour gas treatment and carbon sequestration asset in
the market and, with the support of our producer clients, achieved
our goal. We would also like to thank the Black Bay Energy Capital
team for their close partnership and support to start this business
during an extremely challenging time in the energy markets,” said
Steven Green, CEO of Piñon Midstream.
“Black Bay has a history of partnering with talented
entrepreneurs to build best-in-class businesses, such as Piñon
Midstream, and also positioning them as strategic acquisition
candidates for larger acquirors seeking growth opportunities. We
would like to thank Steven Green, Adam Wilson, David Cargill,
Patrick Westerheide and the rest of the Piñon management team for
their outstanding and relentless efforts in achieving this very
successful outcome,” said Michael LeBourgeois, Managing Partner at
Black Bay. Sam Scofield, Vice President at Black Bay, added, “The
Piñon team successfully executed on their vision to build and scale
critical H2S and CO2 treatment infrastructure for operators in the
prolific Delaware Basin.”
This transaction is expected to be completed in the fourth
quarter of 2024 subject to customary regulatory approvals. The
transaction is expected to be funded using cash on hand and
borrowings under Enterprise’s existing commercial paper and bank
credit facilities.
Piñon Midstream, LLC retained Piper Sandler & Co. as its
financial advisor and Kirkland & Ellis LLP as its legal
advisor.
Locke Lord LLP and Sidley Austin LLP served as legal advisors to
Enterprise.
About Enterprise
Enterprise Products Partners L.P. is one of the largest publicly
traded partnerships and a leading North American provider of
midstream energy services to producers and consumers of natural
gas, NGLs, crude oil, refined products and petrochemicals. Services
include: natural gas gathering, treating, processing,
transportation and storage; NGL transportation, fractionation,
storage and marine terminals; crude oil gathering, transportation,
storage and marine terminals; petrochemical and refined products
production, transportation, storage, and marine terminals and
related services; and a marine transportation business that
operates on key U.S. inland and intracoastal waterway systems. The
partnership’s assets include approximately 50,000 miles of
pipelines; 300 million barrels of storage capacity for NGLs, crude
oil, refined products and petrochemicals; and 14 billion cubic feet
of natural gas storage capacity. Please visit
www.enterpriseproducts.com for more information.
This press release includes “forward-looking statements” as
defined by the Securities and Exchange Commission. All statements,
other than statements of historical fact, included herein that
address activities, events, developments or transactions that
Enterprise and its general partner expect, believe or anticipate
will or may occur in the future are forward-looking statements.
These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially
from expectations, including required approvals by regulatory
agencies, the possibility that the anticipated benefits from such
activities, events, developments or transactions cannot be fully
realized, the possibility that costs or difficulties related
thereto will be greater than expected, the impact of competition,
and other risk factors included in Enterprise’s reports filed with
the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of their dates. Except as required by law, Enterprise
does not intend to update or revise their respective
forward-looking statements, whether as a result of new information,
future events or otherwise.
About Piñon Midstream
Piñon Midstream was formed in 2020 through an initial equity
commitment from Black Bay Energy Capital, to offer sustainable and
cost-effective solutions for sour natural gas production in the
Delaware Basin. Piñon provides a comprehensive suite of services,
including fully NACE compliant field gathering and compression,
amine treating, permanent sequestration of CO2 and H2S, sour
condensate stabilization and marketing, and high-pressure
redelivery of treated natural gas to multiple regional processing
facilities and producers. For more information, please visit
pinonmidstream.com.
About Black Bay
Black Bay is a private equity firm that invests equity capital
in partnership with entrepreneurial management teams who are
building high-growth companies in the energy and chemical
industries. Black Bay’s strategy is to target companies with
innovative products and services that help their clients to reduce
costs, improve operations, and achieve sustainability initiatives.
The firm’s objective is to drive success through a relentless
commitment to establishing and cultivating a true partnership with
portfolio company management teams, and a belief that deeply rooted
partnerships generate outsized returns by fostering collaboration
and creativity. Black Bay is currently investing out of its second
fund and has over $500 million of assets under management. For more
information, please visit www.blackbayenergy.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240821749801/en/
Enterprise Contacts Libby Strait,
Investor Relations, (713) 381-4754 or (866) 230-0745,
ecstrait@eprod.com Rick Rainey, Media Relations, (713) 381-3635,
rrainey@eprod.com
Black Bay Contact Michael
LeBourgeois, Managing Partner, (504) 227-3020,
info@blackbayenergy.com
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