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Enterprise Products (EPD) Signs Deal to Acquire Pinon Midstream
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Enterprise Products Partners L.P. (EPD - Free Report) announced an agreement to acquire Pinon Midstream, LLC, a portfolio company of Black Bay Energy Capital, for $950 million in cash.
The strategic acquisition marks a significant expansion of Enterprise Products’ operations in the Delaware Basin, which spans parts of New Mexico and Texas.
The acquisition is expected to accelerate Enterprise Products’ entry into the eastern flank of the Delaware Basin by at least three to four years, providing a strategic foothold for the company to expand its natural gas processing capabilities in the area. EPD anticipates the deal to generate a distributable cash flow accretion of $0.03 per unit in 2025.
Pinon Midstream operates a comprehensive natural gas gathering and treating system on the eastern flank of the Delaware Basin. Its assets include 50 miles of natural gas gathering and redelivery pipelines, five three-stage compressor stations, and existing hydrogen sulfide (H2S) and carbon dioxide (CO2) treating facilities with a capacity of 270 million cubic feet per day (MMcf/d). An expansion is underway to increase this capacity to 450 MMcf/d by the second half of 2025.
Additionally, Pinon owns two of the highest capacity and deepest acid gas injection wells in the basin. Enterprise Products is evaluating the possibility of adding a third injection well, which would bring the total treating capacity to 750 MMcf/d.
A key asset in this acquisition is Pinon’s Dark Horse facility, a state-of-the-art sour natural gas treating and carbon capture solution. The facility has already captured and sequestered more than 100,000 metric tons of CO2 and H2S, significantly reducing the environmental impact of natural gas operations in the region.
The acquisition is set to close in the fourth quarter of 2024 amid a broader trend of consolidation in the oil and gas pipeline industry. As U.S. production continues to grow and permitting challenges for new pipelines persist, existing midstream operators like Enterprise Products have become increasingly valuable.
Enterprise Products, headquartered in Houston, TX, has been actively expanding its footprint in the U.S. shale regions. In addition to this acquisition, the company is developing two natural gas processing plants in the Delaware and Midland basins, both slated to begin service in 2025.
Zacks Rank & Key Picks
Currently, Enterprise Products carries a Zacks Rank #3 (Hold).
MPLX LP (MPLX - Free Report) derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.21. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Northern Oil and Gas’s (NOG - Free Report) core operations are focused on three leading basins of the United States — the Williston, Permian and the Appalachian. The upstream operator employs a unique non-operating business model, which helps it keep costs down and increase cash flow.
The Zacks Consensus Estimate for NOG’s 2024 EPS is pegged at $5.28. The company has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days. The company has a Zacks Style Score of A for Value and B for Growth.
Devon Energy Corporation (DVN - Free Report) has a multi-basin portfolio and focuses on high-margin assets that hold significant long-term growth potential. Devon also has a diverse commodity mix, with a balanced exposure to oil, natural gas and natural gas liquids production volumes.
The Zacks Consensus Estimate for DVN’s 2024 EPS is pegged at $5.42. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
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Enterprise Products (EPD) Signs Deal to Acquire Pinon Midstream
Enterprise Products Partners L.P. (EPD - Free Report) announced an agreement to acquire Pinon Midstream, LLC, a portfolio company of Black Bay Energy Capital, for $950 million in cash.
The strategic acquisition marks a significant expansion of Enterprise Products’ operations in the Delaware Basin, which spans parts of New Mexico and Texas.
The acquisition is expected to accelerate Enterprise Products’ entry into the eastern flank of the Delaware Basin by at least three to four years, providing a strategic foothold for the company to expand its natural gas processing capabilities in the area. EPD anticipates the deal to generate a distributable cash flow accretion of $0.03 per unit in 2025.
Pinon Midstream operates a comprehensive natural gas gathering and treating system on the eastern flank of the Delaware Basin. Its assets include 50 miles of natural gas gathering and redelivery pipelines, five three-stage compressor stations, and existing hydrogen sulfide (H2S) and carbon dioxide (CO2) treating facilities with a capacity of 270 million cubic feet per day (MMcf/d). An expansion is underway to increase this capacity to 450 MMcf/d by the second half of 2025.
Additionally, Pinon owns two of the highest capacity and deepest acid gas injection wells in the basin. Enterprise Products is evaluating the possibility of adding a third injection well, which would bring the total treating capacity to 750 MMcf/d.
A key asset in this acquisition is Pinon’s Dark Horse facility, a state-of-the-art sour natural gas treating and carbon capture solution. The facility has already captured and sequestered more than 100,000 metric tons of CO2 and H2S, significantly reducing the environmental impact of natural gas operations in the region.
The acquisition is set to close in the fourth quarter of 2024 amid a broader trend of consolidation in the oil and gas pipeline industry. As U.S. production continues to grow and permitting challenges for new pipelines persist, existing midstream operators like Enterprise Products have become increasingly valuable.
Enterprise Products, headquartered in Houston, TX, has been actively expanding its footprint in the U.S. shale regions. In addition to this acquisition, the company is developing two natural gas processing plants in the Delaware and Midland basins, both slated to begin service in 2025.
Zacks Rank & Key Picks
Currently, Enterprise Products carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks mentioned below. These three companies presently carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MPLX LP (MPLX - Free Report) derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.21. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Northern Oil and Gas’s (NOG - Free Report) core operations are focused on three leading basins of the United States — the Williston, Permian and the Appalachian. The upstream operator employs a unique non-operating business model, which helps it keep costs down and increase cash flow.
The Zacks Consensus Estimate for NOG’s 2024 EPS is pegged at $5.28. The company has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days. The company has a Zacks Style Score of A for Value and B for Growth.
Devon Energy Corporation (DVN - Free Report) has a multi-basin portfolio and focuses on high-margin assets that hold significant long-term growth potential. Devon also has a diverse commodity mix, with a balanced exposure to oil, natural gas and natural gas liquids production volumes.
The Zacks Consensus Estimate for DVN’s 2024 EPS is pegged at $5.42. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.