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Plains All American, Oryx Midstream to Merge Permian Basin Assets
08/10/2021
Plains All American Pipeline LP has decided to unite its Permian Basin assets with Oryx Midstream Holdings LLC, a privately held company. The Plains Oryx Permian Basin JV will comprise a crude pipeline with a capacity of 6.8 million bbl/d. This pipeline spans 5,500 miles, with an average remaining contract term of approximately seven years on the JV's 4.1 million committed acres.
Plains All American Pipeline LP owns the bulk of Permian Basin assets. Oryx Midstream, on the other hand, has significant holdings in the Permian Basin. Plains Oryx Permian Basin LLC will operate in the Permian Basin as a joint venture. Plains will hold 65% of the JV, and Oryx will control 35%, with the precise cash split set by a 10-year tiered modified distribution sharing agreement.
Moreover, without synergies, the JV is projected to produce $800 million in EBITDA and $625 million in free cash flow in 2021. The merger agreement's transactions are anticipated to complete in the fourth quarter of 2021.
JV's Journey In Merging Permian Basin Assets
Oryx Midstream and Plains working together is a natural evolution growth story. Plains' assets include about 5,500 pipeline kilometers and a multi-segment pipeline system capacity of 6.8 million barrels per day. Oryx has about 1,600 miles of pipeline and operational storage capacity in the Permian Basin, as well as 1.3 million acres of long-term acreage dedication and marketing agreements.
Midstream operators realize the advantages of scale and the ability to run their systems effectively. In addition, with the recent increase of takeaway capacity from the Permian Basin and a decrease in production levels as operators curtailed operations during the pandemic, the pipeline capacity is sufficient.
When the joint venture officially launches, the emphasis will be on integrating the two systems. With the JV's merged asset base, there will be more possibilities for optimization and operational leverage within the enlarged and integrated system. Plains Oryx Permian Basin JV is a beneficial deal for consumers, providing greater connection, better dependability, and increased efficiency.
This acquisition is a huge step forward in terms of enhancing the capabilities for the benefit of their customers and investors.
Plains Oryx Permian Basin will continue to develop and provide consumers with the best choices available. They are also enthusiastic about the deal and the joint venture's prospects, and what they can offer their consumers.
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