U.S. oil producer Apache Corp is putting its West Texas pipeline assets into a joint venture with investment firm Kayne Anderson that will operate in the largest U.S. shale field, the companies announced on Wednesday.
Apache has invested heavily in its own Permian Basin pipeline and processing plants to support a major oil and gas discovery that it projects will require decades of drilling. The firm has been looking for partners to shoulder the costs of the buildout and has taken stakes in five other pipelines in the region to increase its attractiveness.
Under terms of the deal, Apache will contribute about $1 billion in assets to Kayne Anderson Acquisition, which will have $900 million in cash after a private placement is complete. When the deal closes later this year, Apache will own 71.1 percent of the company, which will be renamed Altus Midstream Co.
Altus Midstream will be structured as a c-corp anchored by substantially all of Apache’s gathering, processing and transportation assets at Alpine High, an unconventional resource play in the Delaware Basin. The company will also own options for equity participation in five gas, NGL and crude oil pipeline projects from the Permian Basin to various points along the Texas Gulf Coast.
Gross volumes projected to approach more than 1 billion cubic feet per day of gas, producing approximately 100,000 barrels per day of NGL by the end of 2020.