Black Diamond Gathering, a joint venture (JV) between Noble Midstream Partners and Greenfield Midstream has agreed to acquire the Saddle Butte integrated crude oil gathering system in the Denver-Julesburg (DJ) Basin in the US for $625m.

The 257.4km long pipeline extends from origin points in or near Weld County, Colorado to destination points in Cushing, Oklahoma. It has a delivery capacity of 300,000 barrels per day and around 210,000 barrels of crude oil storage capacity.

The crude oil pipeline system will be acquired from Saddle Butte Rockies Midstream and affiliates.

Noble Midstream CEO Terry R. Gerhart said: “Saddle Butte is a strategic expansion of our footprint in the DJ Basin, which creates a premier DJ Basin crude gathering system and significantly enhances our third-party customer base.

“The expanded crude gathering system and JV structure provides Noble Midstream flexibility to enhance returns on future capital projects.”

Under fixed fee arrangements, Saddle Butte has around 115,000 dedicated acres from six customers. Included in them are nearly 72,000 dedicated acres from PDC Energy.

Upon completion of the transaction, PDC Energy intends to expand its Saddle Butte acreage dedication to nearly 96,000 acres and extend its dedication by five more years.

Noble Midstream will handle 50% of the purchase price and will raise its stake in the JV to 54.4%, which will be held by its wholly owned subsidiary, Laramie River DevCo. Greenfield Midstream will own the remaining 45.6% of the JV.

Greenfield CEO Jeremy L. Ham said: “We are excited to partner with Noble Midstream on the formation of Black Diamond and look forward to bringing both our commercial and operations expertise to the table.

“This is a powerful combination. The Denver Julesburg Basin is one of the fastest growing plays in the country, Noble Midstream is a world class midstream provider, and we bring strong producer relationships and a long history of creating value for our stakeholders.”

Post transaction, Noble Midstream will take over as operator of the pipeline. The transaction, which is subject to receipt of regulatory approvals among other customary conditions, is anticipated to be completed in the first quarter of 2018.