Noble Midstream exercises option to buy stake in pipeline projects

Noble Midstream Partners has exercised its option with EPIC Midstream to acquire a 15% equity interest in the EPIC Y-Grade natural gas liquids (NGL) pipeline and a 30% stake in the EPIC crude oil pipeline project.

The pipeline projects are designed to carry crude and NGL across Texas for delivery into the Corpus Christi market.

Noble Midstream expects to invest around $165m-$180m to purchase the stake in the EPIC Y-Grade pipeline and $330m-$350m for its stake in the crude oil pipeline project.

The company intends to use its revolving credit facility to fund its equity investment and is seeking partners for private co-investment in the EPIC crude oil pipeline.

EPIC CEO Phillip Mezey said: “The strategic value of these projects to our shippers is clear through the exercising of the options by our partners. Both projects remain on schedule and are critical to the continued development of the Permian Basin and Eagle Ford Shale.”

With a throughput capacity of around 440MBbl/d, the 700-mile EPIC Y-Grade pipeline will connect NGL reserves in the Permian and Eagle Ford to Gulf Coast refiners, petrochemical companies, and export markets.

The third and final phase of the project is currently under construction.

The 30in EPIC crude oil pipeline has a capacity to transport 590MBbl/d from the Delaware Basin to the Gulf Coast, with potential for further expansion to around 900MBbl/d. Construction of the pipeline is expected to be completed by January next year.

Noble Midstream general partner CEO Terry Gerhart said: “We are excited to work with our new partners and participate in the EPIC projects, capitalising on the growing demand for crude oil and NGL takeaway and export capability from the Permian Basin.

“These additions are complementary to our existing portfolio, enhance our customer diversification, and will add a stable and high-quality source of cash flow from a premier US unconventional basin.”

Altus Midstream Company and Rattler Midstream exercised options to buy 15% and 10%, respectively, in the EPIC crude pipeline project.

Once the crude pipeline transaction is completed, EPIC will own a 45% interest in the project and Noble Midstream (30%), Altus Midstream (15%), and Rattler Midstream (10%) will hold the remaining stake.

The ownership structure in the NGL pipeline will change to EPIC (75%), Noble Midstream (15%), and Salt Creek Midstream (10%).

Completion of the transactions is subject to certain closing conditions and is expected to occur this month.