US-based oil and gas firm Enterprise Products Partners (EPD) has signed an agreement with Pioneer Natural Resources and Reliance Industries to acquire Eagle Ford Shale (EFS) Midstream assets for $2.15bn.
Pioneer owned a 50.1% stake in the pipeline and processing company, and Reliance owned the remaining 49.9%.
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Reliance Holding USA president and CEO Walter Van de Vijver said: "EFS has succeeded in its objective of building the gathering and midstream structure in a timely manner to support ramp-up of the Reliance-Pioneer Eagle Ford Upstream Joint Development operations."
"EFS has now transitioned from ‘development’ mode to ‘stable operations’ mode, generating free cash flows since 2013. EFS monetisation thus provides a significant opportunity for unlocking value for our shareholders."
EPD will pay the purchase price in two instalments, with the first one for $1.15bn to be paid at the transaction closure and the second for $1bn to be paid within 12 months of the closing date.
The transaction is expected to be closed in the third quarter this year.
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By GlobalDataEFS Midstream operates nearly 460 miles of natural gas gathering pipelines and ten central gathering plants in the Eagle Ford Shale region in Texas, US.
The firm maintains 119 thousand barrels of condensate stabilisation capacity per day and can treat 780 million ft3 of natural gas daily.
Under the terms of the agreement, Reliance and Pioneer will continue to use the EFS Midstream assets for 20 years, which also includes a provision for minimum volume requirement for the initial seven years.
Pioneer chairman and CEO Scott D. Sheffield said: "The sale of EFS Midstream will further improve our already strong balance sheet and allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp asset in the Permian Basin of West Texas, which we have successfully transformed from a vertical play into a world-class horizontal play."
Enterprise Products Partners chief executive officer Michael A. Creel said: "This purchase and the associated long-term, fee-based agreements expand our relationship with Pioneer and Reliance and broaden the midstream services that we provide to them.
"This ‘bolt on’ acquisition extends our integrated system deeper into the NGL and condensate rich areas of the Eagle Ford, which will provide us with the ability to offer services to additional producers and increase volumes on our system.
"The minimum volume commitments support annual revenue growth and cash flow assurance"
