Enterprise Products (EPD) Announces Permian Asset Acquisitions

Enterprise Products Partners L.P. EPD announced a series of strategic acquisitions from Western Midstream Partners WES, a subsidiary of Occidental Petroleum OII. The acquisitions, valued at $400 million, mark a shift in the landscape of the energy infrastructure in the United States, particularly in the Permian Basin.

Key Acquisitions and Financial Details

Enterprise Products acquired significant assets from Western Midstream, including a 20% interest in Whitethorn, which owns the Midland-to-Sealy segment of the crucial Midland-to-ECHO1 crude Texas pipeline. This pipeline boasts an impressive capacity of 620,000 barrels per day. Additionally, Enterprise Products purchased a 25% stake in two Natural Gas Liquids (NGL) fractionators located in Mont Belvieu, Texas.

The total cash consideration for these transactions amounts to $400 million, with the deals being debt-free. The acquisitions were funded for $375 million using cash on hand and proceeds raised from the issuance of short-term notes.

Importance of the Acquisitions

The acquisitions are not only immediately accretive to Enterprise Products’ distributable cash flow per unit but also significantly bolster its infrastructure in the Permian Basin. The pipeline assets and fractionation assets are integral to Enterprise Products’ NGL system, underlining the company's commitment to strengthening its footprint in this vital energy-producing region.

Occidental's Strategic Divestment

The sale comes in the wake of reports that Occidental, owning a 49% stake in Western Midstream and controlling its operations, was looking to offload some of its assets in the Permian Basin. This move is part of the company's broader strategy following its acquisition of CrownRock in December 2023, as it seeks to manage debt.

Occidental’s president and CEO, Vicki Hollub, highlighted the robust demand for assets in the Permian Basin, making it an opportune time for such divestitures. With Western Midstream valued at an estimated $20 billion, these transactions represent a significant reshaping of Occidental's portfolio.

Conclusion

The strategic acquisitions by Enterprise Products from Western Midstream, coupled with Occidental's divestment strategy, signal a dynamic shift in the energy sector, particularly in the Permian Basin. As the industry continues to evolve, these moves underscore the ongoing realignment of assets and priorities among major players in the U.S. energy landscape.

Zacks Rank & Other Stock to Consider

Enterprise Products currently carries a Zacks Rank #2 (Buy).

Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA Inc. MUSA is a leading independent retailer of motor fuel and convenience merchandise in the United States.

The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $25.36. The company has a Zacks Style Score of A for Growth and Value. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days.

Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.

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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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