Enterprise Products Partners has signed an agreement with an affiliate of Warburg Pincus to acquire Navitas Midstream Partners in an all-cash deal worth $3.25bn.
Navitas Midstream is engaged in providing natural gas gathering, treating and processing services in the core of the Midland Basin of the Permian.
Its assets consist of 1,750 miles (2,816km) of pipelines and more than one billion cubic feet per day of cryogenic natural gas processing capacity following the completion of the Leiker processing plant.
With 240 million cubic feet per day (MMcf/d) RSV processing capacity and inlet carbon dioxide and hydrogen sulfide treating capabilities, the Leiker plant is expected to be completed in the first quarter of 2022.
Enterprise’s general partner co-chief executive officer and chief financial officer Randy Fowler said: “The system, including its large footprint of low pressure natural gas gathering, is an attractive processing franchise that provides value added services to producers.
“We believe this acquisition will be immediately accretive to distributable cash flow per unit. Based on the current outlook for commodity prices in 2023, which would be our first full year of ownership, we believe distributable cash flow accretion will be in the range of $0.18 to $0.22 per unit.
“This investment will provide Enterprise with an attractive return on capital and support additional capital returns to our limited partners through distribution growth and buybacks of common units.”
The deal is expected to facilitate an entry point for Enterprise’s natural gas processing and NGL business into the Midland Basin.
The Midland Basin is regarded as one of the most economic and prolific crude oil regions in the US. Drilling activity in the region accounts for nearly 20% of the active onshore drilling rigs in the country.
Enterprise stated that the acquisition offers visibility to future growth with up to 10,000 drilling locations.
Subject to customary regulatory approvals, the transaction is expected to be completed in the first quarter of 2022.
Enterprise is expected to fund the acquisition using cash on hand and borrowings under the partnership’s existing commercial paper and bank credit facilities.
