Enterprise Products Partners L.P. EPD has entered into definitive agreements with the affiliates of Pioneer Natural Resources Company PXD and Reliance Industries Limited to acquire all of the member interests in EFS Midstream LLC from them. The transaction has been valued at $2.15 billion.
The acquisition cost will be paid in two instalments. The first instalment of $1.15 billion will be paid at the closure of the deal, while the final instalment of $1.0 billion will be paid within a year of the closing date.
EFS Midstream offers various services such as gas gathering, treating, compression and condensate processing in the Eagle Ford Shale. The EFS Midstream system comprises about 460 miles of natural gas gathering pipelines, 10 central gathering plants, 780 million cubic feet per day of natural gas treating capacity and 119 thousand barrels per day of condensate stabilization capacity.
Per the terms of the agreement, the Pioneer and Reliance joint development will commit its Eagle Ford shale acreage to Enterprise Products Partners or two decades under a fixed-fee gathering agreement. The deal also makes mention of a minimum volume requirement for the first seven years. In return, Pioneer and Reliance will also commit their Eagle Ford Shale acreage under the aforesaid 20-year fee-based agreement with the company for natural gas processing, natural gas liquids transportation and fractionation, as well as for natural gas, processed condensate and crude oil transportation services.
The transaction is scheduled to close in the third quarter of 2015, subject to customary regulatory approvals and closing conditions.
Enterprise currently carries a Zacks Rank #3 (Hold). Better-ranked players from the same space include Transmontaigne Partners L.P. TLP and Pembina Pipeline Corporation PBA. Both these stocks sport a Zacks Rank #1 (Strong Buy).
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