Plains All American Pipeline to acquire Alpha Holding Company for $1.21bn

Plains All American Pipeline (PAA) has signed agreements to acquire 100% of the equity interests of Alpha Holding Company, which indirectly owns the Alpha Crude Connector (ACC) gathering system in the Northern Delaware Basin for $1.21bn.

The system is located in Lea and Eddy counties, New Mexico, which also extends into Loving, Winkler and Culberson counties, Texas, US, and comprises 515 miles of gathering and transmission lines, as well as five market interconnects.

The company also signed sales agreements at a total of $380m, including two pending transactions aggregating about $310m and the completion of a third transaction this month for approximately $70m.

Located in the northern portion of the Delaware Basin, the crude oil gathering system is supported by substantial acreage dedications from several producers active in this Delaware Basin portion.

PAA chairman and CEO Greg Armstrong said: “The Northern Delaware Basin is an area that is experiencing increased activity levels and significant industry investment.

“We expect aggregate crude oil production on the dedicated acreage to double over the next two to three years, and we believe that overall Permian Basin crude oil volumes have the potential to grow as much as 50% or more during this same time period.”

PAA recently announced expansion of the capacity on its Cactus pipeline from McCamey to Gardendale, Texas, to about 390,000 barrels per day, which is slated for completion in the third quarter.

With this, the company will be able to increase production volumes from the Permian Basin to Corpus Christi and other delivery points along the system.

Additionally, PAA expects its expansion capital programme for this year to be about $800m.

Subject to customary closing conditions, including receipt of regulatory approvals, the acquisition and pending sale transactions are expected to close during the first half of this year.