Pipeline Operator Enterprise Products to Buy Pinon Midstream for $950 Million

(Reuters) — Pipeline operator Enterprise Products Partners said on Wednesday it will buy smaller peer Pinon Midstream for $950 million in cash to expand its natural gas infrastructure.

Dark Horse Treating Facility in Lea County, New Mexico

The oil and gas pipeline industry has seen increased consolidation since last year as U.S. production grows and as problems with permits for new pipelines have made existing operators more valuable.

Pinon, a portfolio company of Black Bay Energy Capital, operates in the Delaware Basin in New Mexico and Texas. It provides natural gas gathering and treating services in the eastern flank of the basin.

RELATED: Piñon Midstream Secures EPA Approval for Carbon Capture at Dark Horse Facility

Pinon's assets include gathering and redelivery pipelines, treating facilities for hydrogen sulfide and carbon dioxide, as well as two acid gas injection wells.

The company's Dark Horse Facility is a state-of-the-art sour natural gas treating and carbon capture solution designed specifically for oil and natural gas producers in the Delaware Basin. This facility plays a crucial role in reducing the environmental impact of operations in the region by capturing and permanently sequestering over 100,000 metric tons of carbon dioxide (CO2) and hydrogen sulfide (H2S) to date.

Pinon also operates four fully NACE-compliant compressor stations, offering approximately 200 MMcf/d of total compression capacity, with two additional stations set to come online in 2024, increasing the total capacity to around 350 MMcf/d.

The company’s gathering and treating system is anchored by the Grande sweet gas redelivery pipeline, a 22-mile high-pressure, 20-inch steel pipeline that connects the Dark Horse Facility with four major regional processors.

"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," said A.J. Teague, co-CEO of Enterprise's general partner.

Enterprise Products, headquartered in Houston, Texas, has been expanding its operations in the United States shale patch. It is developing two natural gas processing plants in the Delaware and Midland basins, expected to start service in 2025.

The company expects to generate distributable cash flow accretion of $0.03 per unit in 2025.

The acquisition deal is expected to close in the fourth quarter of 2024.

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