US midstream energy services provider Enterprise Products Partners, through an affiliate, has signed a definitive agreement to acquire Piñon Midstream for $950m in cash.
Piñon Midstream, a portfolio company of Black Bay Energy Capital, offers natural gas gathering and treating services.
The company’s operations are focused on the eastern flank of the Delaware Basin, spanning New Mexico and Texas.
Piñon Midstream’s assets encompass more than 80km of natural gas gathering and redelivery pipelines, along with five three-stage compressor stations.
They also feature 270 million cubic feet per day of hydrogen sulfide and carbon dioxide treating facilities, with an anticipated expansion to 450 million cubic feet per day by the second half of 2025.
Additionally, the company is said to operate two of the basin’s highest-capacity and deepest acid gas injection wells.
As part of this deal, Enterprise is assessing potential sites for a third injection well, which could boost total treating capacity to up to 750 million cubic feet per day.
The business operates under fee-based contracts with long-term acreage commitments and minimum volume requirements.
Enterprise stated that the Delaware Basin region, particularly in Lea County, New Mexico and Winkler County, Texas, has approximately 7,500 possible well sites and access to at least six geologic production benches.
Drilling activity in this region has been constrained due to a lack of capacity for sour natural gas processing and acid gas injection wells, as well as a lengthy permitting procedure that can take up to two years.
Enterprise Products Partners co-CEO Jim Teague said: “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.”
Piñon Midstream CEO Steven Green said: “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.”
The transaction is anticipated to be finalised in the fourth quarter of 2024, pending standard regulatory approvals.
