Plains All American and Oryx Midstream have agreed to combine their midstream assets in the Permian Basin, US into a newly created joint venture (JV).
Dubbed as Plains Oryx Permian Basin, the joint venture will hold the respective assets, operations, and commercial activities of the two companies.
Plains All American will have a 65% stake in the JV, while Oryx Midstream, which is owned by Stonepeak Infrastructure Partners, will hold the remaining 35% stake. The former will be the operator of the JV.
Plains All American chairman and CEO Willie Chiang said: “This joint venture is a natural combination and logical next step to optimising our highly complementary systems.
“Structured as a debt-free JV entity through a cashless transaction, this aligns with Plains’ financial and portfolio optimisation strategies, is near-term free cash flow accretive to Plains and Oryx, and reinforces Plains’ ability to maximise free cash flow for our investors, while enhancing our overall credit profile.”
Plains All American’s contribution to the JV includes nearly 6,276.4km of pipeline and associated operational storage capacity located in the Permian Basin.
Besides, the publicly traded master limited partnership will provide Plains Oryx Permian Basin with long-term acreage dedication and marketing agreements covering nearly 2.8 million acres, along with supply and facilities dedications.
The joint venture will not include Plains All American’s long-haul pipeline systems and some of its intra-basin terminal assets.
On the other hand, Oryx Midstream will contribute nearly 2,575km of pipeline and associated operational storage capacity within the Permian Basin. Additionally, the company will offer the JV with long-term acreage dedication and marketing agreements covering around 1.3 million acres.
Plains All American and Oryx Midstream have agreed to a tiered modified distribution sharing arrangement (MSA) for up to a period of 10 years.
Oryx Midstream CEO Brett Wiggs said: “Since our team started Oryx in late 2013, we have been committed to being a leading strategic partner to our customers and to building a world-class system in the Permian.
“This combination is a natural evolution of the Oryx growth story and perpetuates that commitment, creating the premier crude oil logistics system in the basin, increasing connectivity, enhancing reliability, and strengthening efficiencies for our customers.”
The joint venture deal, which is subject to regulatory approvals and other conditions, is anticipated to be completed in the fourth quarter of 2021.
Last month, Plains All American signed agreements with Hartree Partners for divesting its Pine Prairie and Southern Pines natural gas storage facilities in Louisiana and Mississippi, respectively to an affiliate of the latter for $850m.
