Pipeline operator Enterprise Products Partners will acquire Navitas Midstream Partners LLC from an affiliate of investment firm Warburg Pincus for $3.25 billion in cash. Navitas Midstream provides natural gas gathering, treating, and processing services in the core of the Midland Basin of the Permian in West Texas. Navitas’ assets include approximately 1,750 miles of pipelines and more than 1 Bcf/D of cryogenic natural gas processing capacity with the completion of the Leiker plant, which is expected in the first quarter of 2022.
The acquisition provides Enterprise’s natural gas processing and NGL business with an entry point into the prolific Midland Basin. Drilling activity in the Midland currently represents about 20% of active onshore drilling rigs in the US. The system is anchored by long-term contracts and acreage dedications with a diverse group of more than 40 independent and publicly owned producers.
Navitas Midstream provides visibility to future growth with up to 10,000 drilling locations, or more than 15 years of drilling inventory based on current rig counts, on the dedicated acreage. The system is supported by fee-based contracts that provide additional revenues based on commodity prices.
“The Navitas management team has developed a premier system in the heart of the Midland Basin,” said A. J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner. “The Delaware and Midland basins are the two most attractive regions in the US in terms of crude oil, natural gas, and NGL [natural gas liquids] reserves with each having up to nine geologic horizons. We do not have a natural gas or NGL presence in the Midland Basin other than downstream pipelines. This acquisition will give us an entry point into the basin.”
Enterprise believes the acquisition will be immediately accretive to distributable cash flow per unit. Based on the current outlook for commodity prices in 2023, which would be its first full year of ownership, it sees distributable cash flow accretion in the range of $0.18 to $0.22 per unit.
The debt-free transaction is expected to be completed in the first quarter of 2022 subject to customary regulatory approvals. The deal is expected to be funded using Enterprise’s cash on hand and borrowings under the partnership’s existing commercial paper and bank credit facilities.
