New York-listed ONEOK Partners, one of the largest publicly-traded master limited partnerships (MLP) in the US, has agreed to acquire an 80 percent stake in the West Texas LPG Pipeline and a 100 percent interest in the Mesquite Pipeline – adding approximately 2,600 miles of natural gas liquids (NGL) gathering pipelines to its existing network – from affiliates of Chevron Corporation for approximately $800 million, the Oklahoma-based company said in a statement.
The gathering pipelines to be acquired extend from the Permian Basin, the largest crude oil and natural gas producing basin in the US, in southeastern New Mexico to western Texas. The remaining 20 percent stake in West Texas LPG is held by Martin Midstream Partners. ONEOK Partners will operate both pipelines upon the closing of the transaction.
“With this acquisition, along with other announced capital-growth projects in North Dakota, Oklahoma and Wyoming, the partnership’s total investment has increased by more than $3 billion in the last year,” ONEOK Partners president and chief executive Terry Spencer said.
The acquisition is part of ONEOK’s capital projects programme, according to which the MLP intends to invest a total of $8.3 billion to $9 billion between 2010 and 2016. To date and including this transaction, ONEOK has already invested approximately $5 billion in capital growth projects.
“Acquiring these natural gas liquids pipelines allows us to continue to serve producers in the Permian Basin and other multiple high producing NGL-rich basins, including the Williston Basin, the Powder River Basin, and the Cana-Woodford and SCOOP plays in Oklahoma,” Spencer added.
In addition to increasing ONEOK Partners’ NGL gathering system by more than 60 percent to nearly 6,900 miles of NGL gathering pipelines, the acquisition of West Texas LPG and Mesquite is also expected to increase the partnership’s gathered NGL volumes by nearly 40 percent to approximately 800,000 barrels per day systemwide, according to the statement.
From a financial standpoint, the acquired assets are expected to generate $40 million in annual adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) in 2014 with significant growth potential, ONEOK said.
The MLP has promised to offer jobs to all of the approximately 75 employees working for West Texas LPG and Mesquite.
The transaction, which is subject to customary conditions including antitrust clearance from the Federal Trade Commission (FTC), is expected to close in the fourth quarter of 2014.
Headquartered in Tulsa, Oklahoma, ONEOK Partners is comprised of three business segments: natural gas gathering and processing, natural gas pipelines and natural gas liquids. Its general partner is a subsidiary of ONEOK, an energy company founded in 1906 active in natural gas distribution and energy services. ONEOK owns 38.5 percent of the partnership.