Pipeline operator Enterprise Products Partners announced that it would buy Warburg Pincus-owned Navitas Midstream for US$3.25 billion in cash, entering the active Midland basin to tap into increased demand for natural gas infrastructure, reported Reuters.
Woodlands, Texas-based Navitas owns a network of around 1,750 miles of natural gas pipelines in the Midland portion of the Permian basin, the region of Texas and New Mexico considered the heart of the US shale industry.
The deal comes as a surge in demand and supply crunches have pushed natural gas prices to record highs. Front-month US gas futures were trading around US$4.09 on Monday, January 10, over 60% higher than from the start of 2021.
Enterprise currently owns only some downstream pipelines in the Midland basin, CEO Jim Teague said in a statement.
Navitas is expected to reach one billion cubic feet per day of cryogenic natural gas processing capacity once it completes its Leiker plant in Texas in the first quarter of 2022, during which Enterprise also plans to close the deal.
The acquisition will be immediately accretive to Enterprise’s distributable cash flow per unit, Teague said, adding that it would also support additional returns to shareholders through dividends and buybacks.
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