HOUSTON–(BUSINESS WIRE)–Noble Midstream Partners LP (NYSE:NBLX) (“Noble Midstream” or “the Partnership”) and Plains All American Pipeline, L.P. (NYSE:PAA) (“Plains”) today announced they have entered into definitive agreements to form a 50/50 joint venture (“JV”) to acquire Advantage Pipeline, L.L.C. (“Advantage”), which owns a 70-mile, 16-inch crude oil pipeline located in the southern Delaware Basin (the “Advantage Pipeline”).
The Advantage Pipeline, constructed in 2013, has 150,000 barrels of daily shipping capacity from Reeves County, Texas to Crane County, Texas. The Advantage system also includes approximately 490,000 barrels of combined crude storage at three separate trucking stations in Reeves, Pecos and Crane Counties.
“We are excited to expand our Delaware Basin footprint further downstream and establish a partnership with Plains,” stated Terry R. Gerhart, Chief Executive Officer of Noble Midstream. “Advantage has created a leading crude transmission pipeline and storage system in the Southern Delaware Basin. With this transaction we are able to provide our sponsor and third party producers connections to multiple market centers and Plains’ premier pipeline network.”
The JV will acquire Advantage for $133 million, with Noble Midstream’s 50% interest totaling $66.5 million. Upon close of the JV, throughput growth on the Advantage Pipeline will be driven by an acreage dedication from Noble Energy, Inc. and a volume commitment from Plains Marketing, L.P.
Noble Midstream will serve as the operator, and will construct a wholly owned 15-mile pipeline to deliver crude oil to the Advantage Pipeline from its first central gathering facility. Plains will construct a pipeline to connect its Wolfbone Ranch facility to the Advantage Pipeline near Highway 285. The connections are estimated to be completed in the second quarter of this year.
Noble Midstream’s JV interest will be funded with cash on hand and its undrawn credit facility. The Partnership’s JV interest will be held by Trinity River DevCo LP, a newly formed, 100% owned development company. The closing of the transaction is anticipated to occur in the first quarter 2017 and is subject to certain conditions precedent specified in the agreement.