DALLAS — This article was originally published by our content partners at the Dallas Business Journal. You can read the original article here.
Two Dallas-based oil and gas giants that have been active dealmakers so far in 2024 just agreed to pursue a joint venture in the Permian Basin.
Energy Transfer LP and Sunoco LP announced July 16 that they will combine their crude oil and produced water-gathering pipelines and related equipment in the Permian Basin, which spans West Texas and New Mexico. Energy Transfer (NYSE: ET) will serve as the operator of the joint venture and hold a 67.5% interest, while Sunoco (NYSE: SUN) will hold a 32.5% interest
Formed July 1, the JV will operate more than 5,000 miles of crude oil and water-gathering pipelines with crude oil storage capacity of more than 11 million barrels.
Energy Transfer's long-haul crude pipeline network that moves oil from the Permian Basin to Nederland, Houston and Cushing is excluded from the joint venture.
The new JV is expected to be immediately accretive to distributable cash flow for both Energy Transfer and Sunoco.
The firms have close ties and and been been active in mergers and acquisitions so far this year. Energy Transfer, formed in 2018 through the merger of Energy Transfer Partners and Energy Transfer Equity, owns and operates more than 130,000 miles of pipeline and associated energy infrastructure. The firm also owns the general partner interests, incentive distribution rights and about 21% of Sunoco.
Energy Transfer also owns Lake Charles LNG Co., in addition to the general partner interests and 39% in Austin-based USA Compression Partners LP (NYSE: USAC).
The company is currently in the midst of a $3.25 billion acquisition of Midland-based WTG Midstream Holdings LLC. That deal came on the heels of a $7.1 billion acquisition of Houston-based Crestwood Equity Partners LP completed in November 2023.
Sunoco closed a $7.3 billion purchase of San Antonio-based NuStar Energy LP in May. The company also sold 204 stores spread across West Texas, New Mexico and Oklahoma to Irving-based 7-Eleven Inc. in April. The purchase price was 145,787 million yen, or about $950 million at an April 15 exchange rate.
Intrepid Partners LLC served as financial advisor to Energy Transfer in the formation of the joint venture, while Potter Anderson & Corroon LLP provided legal advice. Guggenheim Securities LLC provided financial advice to Sunoco and Layton & Finger PA was legal counsel.
Vinson & Elkins LLP and Akin Gump Strauss Hauer & Feld LLP also provided legal counsel to both companies on the transaction.
