The move significantly expands Enterprise's infrastructure in the prolific Permian Basin, providing access to over 1,000 future drilling locations.
Enterprise Products Partners L.P., a leading North American midstream energy services provider, announced today the completion of a significant acquisition in the heart of the U.S. energy landscape. The company finalized the purchase of a natural gas gathering affiliate from Occidental, a major Permian Basin producer, in a deal valued at $580 million in cash.
The acquisition includes natural gas gathering systems and approximately 200 miles of pipelines that support Occidental’s production operations in the Midland Basin, a highly active sub-basin of the larger Permian. With direct access to more than 1,000 identified drillable locations, the new assets are poised to seamlessly integrate into Enterprise's existing infrastructure, immediately expanding its natural gas gathering footprint and offering long-term visibility for development. This purchase is a key component of Enterprise's strategy to expand its Midland Basin franchise through targeted acquisitions that connect to its current midstream network.
This transaction is part of a larger trend in the energy sector where large midstream operators are consolidating assets to gain a stronger foothold in key production basins. For Occidental, the sale represents a continuation of its strategy to divest non-core assets to focus on its primary production business and reduce debt. According to previous statements from Occidental, the proceeds from this and other recent divestitures are being used to strengthen its balance sheet, particularly following its acquisition of CrownRock in late 2023. This financial discipline allows the company to high-grade its asset portfolio and concentrate on its most profitable operations.
The Permian Basin, a vast energy-rich depression spanning parts of West Texas and New Mexico, remains a crucial hub for U.S. oil and gas production, accounting for a significant portion of the nation's output. The basin's geology allows for a single well to produce from multiple layers, making robust gathering and processing infrastructure essential to keep pace with rapid production growth. Companies like Enterprise, which operate in the "midstream" part of the value chain, are critical for moving hydrocarbons from the wellhead to processing plants, storage facilities, and ultimately, to consumers.
Enterprise's business model is centered on providing a comprehensive suite of services, including gathering, treating, processing, transportation, and storage for a wide range of energy products. The company's assets already include over 50,000 miles of pipelines and extensive storage capacity for natural gas and other liquids. The addition of Occidental's gathering systems is a natural extension of this network, designed to accommodate the increasing volumes of natural gas produced as a co-product of crude oil drilling in the Midland Basin.
