Enterprise Acquires Joint Venture Interests From Western Midstream
- Acquisition of Whitethorn and EF78 from Western Midstream Partners for $375 million
- Enterprise now owns 100% of Whitethorn and EF78, boosting its midstream assets
- Enhanced presence in the Permian Basin and NGL system
- Immediate accretion to Enterprise's distributable cash flow per unit
- None.
Insights
The acquisition by Enterprise Products Partners L.P. of additional interests in Whitethorn Pipeline Company LLC and Enterprise EF78 LLC represents a strategic consolidation of assets that is likely to have a positive impact on the company's financial performance. By obtaining full ownership of the Midland-to-Sealy crude oil pipeline and the NGL fractionators, Enterprise is positioned to benefit from increased control over its operations and potential cost efficiencies. The immediate accretion to distributable cash flow per unit suggests a favorable effect on shareholder returns in the near term.
Considering the transaction was completed without incurring additional debt, by using cash on hand and short-term notes, it reflects prudent financial management. The ability to fund acquisitions internally without significantly leveraging the company's balance sheet is a positive indicator of financial health. Furthermore, the focus on assets in the prolific Permian Basin and the integration into Enterprise's NGL system underscores the company's commitment to strengthening its core business segments.
The consolidation of midstream assets by Enterprise Products Partners L.P. is indicative of the ongoing trend in the energy sector towards vertical integration. Full ownership of the Midland-to-Sealy pipeline and the Mont Belvieu NGL fractionators enhances Enterprise's operational efficiency and could provide a competitive edge in the midstream market. Given the strategic importance of the Permian Basin for U.S. oil production, controlling key infrastructure in this region could yield long-term benefits for Enterprise, including improved logistics and bargaining power with upstream and downstream partners.
Furthermore, the acquisition aligns with industry moves towards optimizing asset portfolios for better alignment with core business activities. The expansion of Enterprise's asset base in key locations reinforces its position as a leading North American provider of midstream services, which may lead to increased market share and influence over regional pricing dynamics.
The midstream energy sector, particularly in North America, is experiencing a phase of consolidation and optimization, a trend reflected in Enterprise's recent asset acquisitions. As Enterprise Products Partners L.P. expands its asset footprint, it is important to monitor the market's response to such strategic moves. The integration of these assets into Enterprise's portfolio is likely to enhance its service offerings, potentially attracting new customers and solidifying relationships with existing clients.
By analyzing market trends and competitor strategies, one can infer that Enterprise's increased asset control could lead to greater market responsiveness and agility in adapting to fluctuating demand and pricing in the oil and gas markets. The strategic location of the assets in Texas, a hub for energy infrastructure, further positions Enterprise to capitalize on the growing demand for midstream services as the energy market continues to recover and evolve.
Enterprise completed the acquisition of Western’s 20 percent equity interest in Whitethorn, which owns the 620,000 barrel per day Midland-to-Sealy portion of the Midland-to-ECHO 1 crude oil pipeline. Enterprise now owns 100 percent of Whitethorn.
Enterprise also completed the acquisition of Western’s 25 percent equity interest in EF78, which owns natural gas liquids (“NGL”) fractionators 7 and 8 located in
“We are pleased to complete these transactions to consolidate ownership in these midstream assets,” said A. J. “Jim”
The Whitethorn and EF78 transactions were completed and funded on February 16, 2024 using a combination of cash on hand and proceeds from the issuance of short-term notes under the partnership’s commercial paper program.
Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. Services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage and marine terminals; crude oil gathering, transportation, storage and marine terminals; petrochemical and refined products transportation, storage and marine terminals; and a marine transportation business that operates on key
This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that Enterprise and its general partner expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Enterprise’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, Enterprise does not intend to update or revise their respective forward-looking statements, whether as a result of new information, future events or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221257200/en/
Randy Burkhalter, Investor Relations, (713) 381-6812 or (866) 230-0745, rburkhalter@eprod.com
Rick Rainey, Media Relations (713) 381-3635, rrainey@eprod.com
Source: Enterprise Products Partners L.P.
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