Joint Venture Summary
- Significant value for customers via increased connectivity, operational flexibility, and access to markets
- Highly complementary Permian Basin assets, capabilities, and long-term business models
- JV Ownership: 65% Plains / 35% Oryx (governance consistent with ownership interests)
- Plains will serve as operator of the JV
- A
Joint Operating Committee that includes representatives from Plains and Oryx will provide oversight on material JV operating and commercial decisions - JV will be consolidated into PAA‘s financial statements
- Near-term free cash flow accretive to Plains and Oryx
- Cashless transaction, debt-free JV entity
- Durable JV structure, attractive in any reasonable oil price environment
“This is a very positive announcement for Plains, Oryx and our Permian Basin customers,” said
“Since our team started Oryx in late 2013, we have been committed to being a leading strategic partner to our customers and to building a world-class system in the Permian,” said
Strategic Alignment, Multiple Benefits
- Permian JV profile (pro-forma summary):
- ~5,500 pipeline miles, ~6.8 MMb/d of pipeline system multi-segment capacity
- Direct downstream connections to all major intra-basin and downstream markets
- ~4.1 million dedicated system acres, including supply and facilities dedications
- ~7 year weighted average remaining contract tenor
- > 30 year average inventory life at current activity levels, vast majority with projected IRR of 25% – 50%+ at
~$50 /Bbl WTI
- Enhances shipper diversification, economies of scale and quality of long-term free cash flow
- Expect to capture +/-
$50 million in operational, cost and capital synergies (8/8th to the JV) on a run-rate basis within 12 months; potential to increase to $100+ million longer-term via additional integration and optimization opportunities - Multiple opportunities to drive operating efficiencies; supports reducing environmental footprint, GHG emissions and overall costs of operations
- Additional upside potential available related to expected Permian production growth
Additional Information Related to the JV
The Plains assets comprising a part of the JV include approximately 3,900 miles of pipeline and related operational storage capacity located within the Permian Basin, long-term acreage dedication and marketing agreements covering approximately 2.8 million acres, and supply and facilities dedications. Plains’ long-haul pipeline systems and certain of its intra-basin terminal assets will not be included within the JV.
The Oryx assets comprising a part of the JV include approximately 1,600 miles of pipeline and related operational storage capacity located within the Permian Basin, in addition to long-term acreage dedication and marketing agreements covering approximately 1.3 million acres.
The JV provides for an overall ownership and distribution sharing arrangement of 65% Plains and 35% Oryx. The parties have agreed to a tiered modified distribution sharing arrangement (“MSA”) for up to 10 years. Details of the MSA are set forth within an 8-K to be filed by Plains.
Subject to satisfaction of customary and other closing conditions (including the refinancing by Oryx of existing debt with a new Term Loan B secured by its equity interests in the debt-free JV) and receipt of regulatory approvals, the transactions contemplated by the merger agreement are expected to close in the fourth quarter of 2021.
Conference Call Information
This morning Plains will host a webcast conference call to discuss this announcement, which is scheduled to begin at
Advisors
The following advisors served in their respective roles for the transaction:
About Plains
PAA is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for primarily for crude oil and natural gas liquids ("NGL"). PAA owns an extensive network of pipeline transportation, terminalling, storage, and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in
PAGP is a publicly traded entity that owns an indirect, non-economic controlling general partner interest in PAA and an indirect limited partner interest in PAA, one of the largest energy infrastructure and logistics companies in North America.
PAA and PAGP are headquartered in
About Oryx
Forward Looking Statements
Except for the historical information contained herein, the matters discussed in this release consist of forward-looking statements that involve certain risks and uncertainties that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. These risks and uncertainties include, among other things, market constraints, third-party constraints, legal constraints (including governmental orders or guidance), or other factors; unforeseen delays with respect to the receipt of regulatory approvals and completion of other closing conditions; and other factors and uncertainties inherent in transactions of the type discussed herein or in our business as discussed in PAA’s and PAGP’s filings with the
Contacts:
Plains All American
Investors
Brett Magill
Director, Investor Relations
(866) 809-1291
Media
Brad Leone
Director, Communications
(866) 809-1290
Oryx Midstream
(210) 737-4478
meredith@redbirdpr.com
Source:
2021 GlobeNewswire, Inc., source