Delek US Holdings has agreed to purchase a 15% ownership interest in the Wink to Webster Long-Haul Pipeline joint venture (JV).
The investment in the JV is expected to be worth between $340m and $380m. The project is anticipated to complete the first half of 2021.
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Delek expects the returns on the pipeline investments to be above the internal hurdle rate of 15% for discretionary logistics projects.
The company plans to use approximately 75% of the financing towards the investment.
In May, the company’s logistics arm Delek Logistics Partners acquired a 33% ownership interest in the Red River crude oil pipeline from Plains Pipeline.
The $128m transaction included an initial payment of $3.5m to expand the pipeline.
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By GlobalDataThe pipeline currently has a capacity of producing 150,000boe/d and is being expanded to 235,000boe/d by the first half of next year. Delek Logistics will contribute more than $20m towards the expansion.
When complete, the expansion will increase Delek US’ production capacity from 35,000boe/d to 100,000boe/d.
Delek US president and CEO Uzi Yemin said: “We have patiently evaluated long-haul pipeline options and are pleased to join a strong set of partners in the Wink to Webster Pipeline LLC joint venture.
“This asset offers attractive return potential and it further integrates our portfolio by allowing us to offer additional services to producers in our gathering system.
“Separately, Delek Logistics’ participation in the Red River pipeline joint venture complements our existing geographic footprint, increases optionality throughout our system and provides a more stable cash flow stream in the future.”
