Enterprise Products to buy Eagle Ford midstream company for $2.15 billion

Enterprise Products/ Getty Images

Enterprise Products/ Getty Images

Houston-based Enterprise Product Partners LP (NYSE: EPD) announced today it will buy Reliance Holding USA, Inc. and Dallas-based Pioneer Natural Resources Co. (NYSE: PXD) Eagle Ford midstream business for $2.15 billion.

The purchase price will be paid in two installments by Enterprise. At the closing of the sale sometime in the third quarter of 2015, the first installment of $1.15 billion will be paid. The remaining $1 billion will be paid twelve months after closing.

In late 2014 Enterprise announced merging with Oiltanking Partners (NYSE: OILT), another strategic move to have a competitive advantage and broaden their midstream energy services business.

Related: Enterprise Products to Merge with Oiltanking Partners

The deal provides Enterprise with ten central gathering plants, around 460 miles of natural gas gathering pipe, and 780 million cubic feet of treatment space from EFS Midstream, the name of the joint venture owned by Reliance and Pioneer in the Eagle Ford Shale.

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Michael Creel, CEO of Enterprise states, “This ‘bolt on’ acquisition extends our integrated system deeper into the NGL and condensate rich areas of the Eagle Ford, which will provide us with the ability to offer services to additional producers and increase volumes on our system.”

Related: Enterprise Partners accused of trying to muscle out competitors

For the next 20 years, both companies will agree to contract with Enterprise to use the newly sold assets, including guaranteed volume commitments for the first seven years.

According to a statement from Pioneer, the sale will net the company about $900 million after taxes.

In exchange for the service agreements on the assets sold, both Pioneer and Reliance expects to save around $200 million in reduced fees from Enterprise.

Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products, and petrochemicals.

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