Energy Transfer, Sunoco Form JV for Permian Oil, Water Assets

Energy Transfer LP and Sunoco LP have formed a joint venture combining their respective crude oil and produced water gathering assets in the Permian Basin.

According to a joint news release from the two partnerships, Energy Transfer will serve as the operator of the joint venture and contribute its Permian crude oil and produced water gathering assets and operations, while Sunoco will contribute all of its Permian crude oil gathering assets and operations to the joint venture.

Energy Transfer will hold a 67.5 percent interest in the joint venture, with Sunoco holding the remaining 32.5 percent. The formation of the joint venture has an effective date of July 1, and is “expected to be immediately accretive to distributable cash flow per LP unit for both Energy Transfer and Sunoco,” according to the release.

Energy Transfer’s long-haul crude pipeline network that provides transportation of crude oil out of the Permian Basin to Nederland, Houston, and Cushing is excluded from the joint venture.

The joint venture 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, according to the release.

Energy Transfer recently completed its acquisition of WTG Midstream Holdings LLC from affiliates of Stonepeak, the Davis Estate and Diamondback Energy, Inc.

The total consideration for the transaction was $2.275 billion in cash and approximately 50.8 million newly issued ET common units.

The acquired assets add approximately 6,000 miles of complementary gas gathering pipelines that extend Energy Transfer’s network in the Midland Basin. Also, as part of the transaction, the partnership added eight gas processing plants with a total capacity of approximately 1.3 billion cubic feet per day, as well as two additional processing plants that are under construction.

Energy Transfer owns and operates one of the largest and most diversified portfolios of energy assets in the USA, with more than 125,000 miles of pipeline and associated energy infrastructure. Energy Transfer’s strategic network spans 44 states with assets in all of the major U.S. production basins.

Dallas-based Energy Transfer also owns Lake Charles LNG Company, as well as the general partner interests, the incentive distribution rights and approximately 21 percent of the outstanding common units of Sunoco, and the general partner interests and approximately 39 percent of the outstanding common units of USA Compression Partners, LP.

Sunoco describes itself as a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers, and distributors located in more than 40 U.S. states and territories, as well as refined product transportation and terminalling assets. Sunoco’s general partner is owned by Energy Transfer LP.

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