The joint venture between Energy Transfer LP and Sunoco LP, which combines their respective crude oil and produced water gathering assets in the Permian Basin, represents a significant development in the industry.
Here’s a summary of the key points:
Joint Venture Details
- Formation: Combining Permian Basin crude oil and produced water gathering assets.
- Operation: Energy Transfer will serve as the operator.
- Contributions:
- Energy Transfer: Permian crude oil and produced water gathering assets and operations.
- Sunoco: Permian crude oil gathering assets and operations.
- Exclusions: Energy Transfer’s long-haul crude pipeline network out of the Permian Basin (to Nederland, Houston, and Cushing) is not included in the joint venture.
Assets and Capacity
- Pipelines: More than 5,000 miles of crude oil and water gathering pipelines.
- Storage: Crude oil storage capacity in excess of 11 million barrels.
Ownership and Financial Impact
- Interest:
- Energy Transfer: 67.5%
- Sunoco: 32.5%
- Effective Date: July 1, 2024.
- Financial Impact: Expected to be immediately accretive to distributable cash flow per LP unit for both companies.
Advisors and Legal Counsel
- Energy Transfer:
- Financial Advisor: Intrepid Partners, LLC (to the conflicts committee)
- Delaware Counsel: Potter Anderson & Corroon LLP (to the conflicts committee)
- Legal Counsel: Vinson & Elkins LLP
- Sunoco:
- Financial Advisor: Guggenheim Securities, LLC (to the special committee)
- Delaware Counsel: Richards, Layton & Finger, P.A. (to the special committee)
- Legal Counsel: Akin Gump Strauss Hauer & Feld LLP
The formation of this joint venture marks a strategic alignment between Energy Transfer LP and Sunoco LP, leveraging their respective strengths in crude oil and produced water gathering operations in the Permian Basin. With Energy Transfer’s extensive operational expertise and Sunoco’s valuable assets, the combined entity is poised to enhance operational efficiencies and create significant value for both partnerships. The immediate accretive impact on distributable cash flow per LP unit underscores the financial prudence of this collaboration, positioning both Energy Transfer and Sunoco for sustained growth and success in the dynamic energy market.
