Black Diamond Gathering, a joint venture (JV) between Noble Midstream Partners and Greenfield Midstream has agreed to acquire a 20% stake in the Saddlehorn pipeline.
The acquisition is valued at $155m or $84m net to Noble Midstream.
Owned by affiliates of Magellan Midstream Partners, Plains All American Pipeline and Western Midstream Partners, the Saddlehorn pipeline is able to transport about 190,000 barrels per day (bpd) of oil and condensate from the DJ and Powder River basins to facilities in Cushing, Okla. Magellan is the pipeline operator.
Noble Midstream president and chief operating officer Robin Fielder said: “This accretive transaction represents a rare opportunity to buy into a largely-contracted pipeline with high-quality producers and midstream operators.
“Saddlehorn strengthens the Black Diamond position as the premier full-service crude transportation provider in the DJ Basin and enhances the value proposition provided to our customers.
“Further, this investment is anticipated to generate high rates of return, provide diversification, and increase our exposure to stable cash flow streams.”
Saddlehorn pipeline’s capacity is being increased by 100,000bpd
Following a successful open season, the Saddlehorn pipeline’s capacity is being increased by 100,000bpd to 290,000bpd.
The increased capacity is expected to be available in the later part of 2020. No additional capital will be required by Black Diamond for the expansion.
Black Diamond expects cash distributions from Saddlehorn in the first quarter of this year.
Noble Midstream operates Black Diamond, which comprises a major incorporated crude oil gathering system in the DJ Basin, which includes 386km of pipeline, 300,000 bpd delivery capacity and 390,000 bpd oil storage capacity.
The system is connected to major takeaway pipelines in the DJ Basin including the White Cliffs Pipeline, the Saddlehorn Pipeline, the Grand Mesa Pipeline, and the Pony Express Pipeline.
Last March, Noble Midstream Partners secured an equity investment commitment, worth $200m, from Global Infrastructure Partners Capital Solutions Fund (GIP) to fund capital needed for a 30% stake in the EPIC Crude Pipeline in Texas.
