Pioneer Natural Resources Co. (NYSE: PXD) said Nov. 4 it plans to sell its majority stake in EFS Midstream LLC, an Eagle Ford Shale midstream business.

The move is projected by analysts to generate more than $1 billion in proceeds, which will be put to use by Dallas’ Pioneer in the Permian Basin.

Pioneer holds a 50.1% interest in EFS Midstream and is the operator of the business. The subsidiary of India-based Reliance Industries Ltd., Reliance Holding USA Inc., also plans to pursue the divestment of its 49.9% share in a joint process with Pioneer.

Pioneer's stake in EFS is expected to generate $100 million in cash flow in 2015, said Gordon Douthat, CFA, senior analyst, Wells Fargo Securities LLC, in a report.

Douthat said the sale "would result in $1-1.5 billion in proceeds at a 10-15x multiple—likely an asset not factored into net asset values."

Pioneer currently doesn't plan to divest its upstream assets in the Eagle Ford Shale, Scott D. Sheffield, Pioneer chairman and CEO, in a statement.

The company expects to use the proceeds to fund development and infrastructure investments in the Spraberry/Wolfcamp play in West Texas, Sheffield said.

“The sale of EFS Midstream would allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp assets in the Permian Basin of West Texas, where we are successfully transforming the substantial resource potential we delineated in 2013 into strong production growth,” he said.

Pioneer placed 73 Permian horizontal wells on production during the third quarter of 2014, the company said.

Its third-quarter production from the Spraberry/Wolfcamp averaged 103 thousand barrels of oil equivalent per day (Mboe/d) with 66 Mboe/d produced from horizontal wells.

In addition, Pioneer announced an equity offering of 5.75 million shares to fund growth in the Spraberry/Wolfcamp play—specifically to construct a front-end loaded infrastructure.

"Together, asset sale and equity proceeds more than cover total infrastructure investments over 2015/2016, which are expected to cost $1.4-1.6 billion with additional $300 million beyond 2016," Douthat said.

The EFS Midstream business was formed in 2010 to construct facilities to provide gathering and handling services for condensate and natural gas produced from wells on dedicated acreage in the Eagle Ford Shale.

The EFS Midstream system consists of 10 central gathering plants (CGPs) and roughly 460 miles of pipelines. The system gathers and separates produced condensate from produced gas. It also stabilizes the condensate, where necessary, and treats the gas.

The business provides services for the Eagle Ford Shale upstream joint venture operated by Pioneer (Pioneer 46%, Reliance 45% and Newpek LLC 9%) and for various third parties.

"The sale of EFS Midstream is not expected to impact our ability to export processed Eagle Ford condensate,” Sheffield said.

The company continues to forecast annual production growth from continuing operations of 16%-21% through 2016.

Pioneer expects to open a data room in December for the EFS Midstream sale.

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