EnLink Midstream Partners LP (NYSE: ENLK) said Aug. 1 it formed a strategic joint venture (JV) with NGP Natural Resources XI LP to grow in the Delaware Basin core.
A subsidiary of the Dallas company, EnLink Midstream LLC (NYSE: ENLC), entered an approximately $800 million JV agreement with a NGP affiliate to operate and expand EnLink's natural gas, NGL and crude oil midstream assets in the Delaware.
The JV is initially owned 50.1% by EnLink and 49.9% by NGP.
The expansion builds off EnLink's existing Lobo System, which was acquired from Matador Resources Co. (NYSE: MTDR) in 2015.
The new expansion, located in Loving County, Texas, and Eddy and Lea counties, N.M., is named Lobo II and includes:
- Installation of a cryogenic natural gas processing facility with capacity up to 120 million cubic feet per day (MMcf/d);
- associated natural gas and liquids gathering pipeline infrastructure.
Upon completion of Lobo II, the facility will have a total processing capacity of about 155 MMcf/d in the Delaware Basin.
The JV is governed by a board of directors initially comprised of two designees of each partner. EnLink will serve as the JV's managing member that will handle day-to-day construction and operation of the assets.
EnLink contributed about $230 million of existing Delaware Basin assets to the JV. The company committed an additional $285 million in capital to fund potential future development projects and potential acquisitions.
NGP committed an aggregate of about $400 million of capital, including an initial contribution of about $115 million. NGP's initial contribution has already been distributed to EnLink at the formation of the JV to reimburse the company for capital spent to date on existing assets and ongoing projects.
As part of the JV agreement, NGP granted EnLink graded call rights beginning in 2021 to acquire increasing portions of NGP's interest in the JV at a price based upon a predetermined valuation methodology.
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