Plains All American Pipeline said on Tuesday it would buy a 55% stake in pipeline operator EPIC Crude Holdings from units of Diamondback Energy and Kinetik Holdings for $1.57 billion, including $600 million in debt.
Plains, among the largest U.S. pipeline and storage operators, is seeking to expand in the Permian Basin of Texas and New Mexico, the country’s top oil-producing region.
EPIC Crude is one of the major pipelines that bring oil from the Permian and Eagle Ford shale basins of Texas to export facilities in Corpus Christi along the U.S. Gulf Coast.
It entered full service in 2020 and has a capacity of more than 600,000 barrels per day that could be expanded to carry up to 1 million barrels per day. It is one of the last readily expandable oil pipelines of scale left in the Permian.
Reuters in August reported that owners of the pipeline were looking at a sale.
“By further linking our Permian and Eagle Ford gathering systems to Corpus Christi, we are enhancing market access and ensuring our customers have reliable, cost-effective routes to multiple demand centers,” Plains CEO Willie Chiang said in a statement.
Plains added the transaction is expected to immediately add to the distributable cash flow and result in mid-teens returns before accounting for debt. The transaction is expected to be completed by early 2026, pending antitrust clearance.
The deal could invite some antitrust scrutiny, as Plains is already one of the largest Permian-focused pipeline companies, two industry sources said. The company declined to comment beyond its statement.
Plains, which has made about 15 acquisitions since 2022, already operates the Cactus and Cactus II pipelines, which together can move over 1 million bpd from the Permian Basin to Corpus Christi. It also owns stakes in BridgeTex and Wink to Webster pipelines that move oil from Permian to Houston.
The company, which has its largest asset presence in the Permian Basin, expects to move about 7.2 million bpd of oil there and about 560,000 bpd in Eagle Ford in 2025.
Plains shares declined 2.25% shortly before the close, while broader holding firm Plains GP Holding shares were down 18%.
Source: Reuters.com