US midstream energy services company Enterprise Products Partners has signed a definitive agreement through a subsidiary to acquire Piñon Midstream for $950 million in cash.
Piñon Midstream, a portfolio company of Black Bay Energy Capital, provides natural gas gathering and treatment services.
The company’s operations are focused on the eastern flank of the Delaware Basin, which straddles New Mexico and Texas.
Piñon Midstream’s assets include more than 50 miles of natural gas gathering and redelivery pipelines, along with five three-stage compressor stations.
They also have 270 million cubic feet per day of hydrogen sulfide and carbon dioxide treatment facilities, with an expected expansion to 450 million cubic feet per day in the second half of 2025.
In addition, the company would operate two of the deepest and largest sour gas injection wells in the basin.
As part of this deal, Enterprise is exploring potential sites for a third injection well, which could increase total treatment capacity to as much as 750 million cubic feet per day.
The company operates under fee-based contracts, with long-term acreage commitments and minimum volume requirements.
Enterprise stated that the Delaware Basin region, primarily in Lea County, New Mexico and Winkler County, Texas, has approximately 7,500 potential well locations and access to at least six geological production banks.
Drilling activity in this region is limited due to a lack of sour natural gas processing capacity and sour gas injection wells, as well as a lengthy permitting process that can take up to two years.
Jim Teague, co-CEO of Enterprise Products Partners, said, “We believe Piñon’s management team has developed the best sour natural gas treatment 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 with an excellent access point to the eastern flank of the Delaware Basin so we can expand our natural gas processing footprint. Our entry offers manufacturers a choice of reliable, value-added processing services.”
Piñon Midstream CEO Steven Green said, “The Piñon team is excited to contribute our unique Delaware Basin gas treatment system to Enterprise, a true leader in the midstream energy sector.
“Our team, and in particular our incredible field crew and loyal employees, set out to build the premier sour gas treatment and carbon capture facility in the market and, with the support of our producer customers, achieved our goal.”
The transaction is expected to close in the fourth quarter of 2024, pending standard regulatory approvals.
“Enterprise Products Partners Signs $950 Million Deal to Acquire Piñon Midstream” was originally created and published by Offshore technologya brand owned by GlobalData.
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