Plains All American Pipeline, L.P. (PAA Quick QuotePAA - Free Report) and Noble Midstream Partners LP announced that they have completed the acquisition of Advantage Pipeline, L.L.C for $133 million. The acquisition, announced on Feb 13, was closed through the partnerships’ newly formed 50/50 joint venture. 

 

The acquisition amount was equally contributed by the partnerships. While Plains All American contributed about 1.3 millions in units and $26.3 million in cash, Noble Midstream paid its part of $66.5 million in cash. Notably, Advantage Pipeline owns a 70-mile, 16-inch crude oil pipeline, located in the southern Delaware Basin.

 

 

Acquiring a pipeline operator in a liquid-rich area, should bring advantages for both the midstream service providers. Founded in 2011, Advantage Pipeline has a daily shipping capacity of 150,000 barrels (expandable to over 200,000 barrels per day) from Reeves County, TX to Crane County, TX. The company also offers approximately 490,000 barrels of combined crude storage at three separate trucking stations in Reeves, Pecos and Crane Counties.

 

Advantage Pipeline provides area producers with more access to multiple markets through interconnections with Plain All American's Permian Basin system. Additionally, Advantage Pipeline will be contractually supported by an acreage dedication from Noble Energy, Inc. and a volume commitment from Plains Marketing, L.P.

 

 

In Jan 2017, Plains All American entered into an agreement to acquire a crude oil gathering system in Permian Basin for $1.2 billion. The crude oil gathering system is situated in the north of the Delaware Basin and supported by substantial acreage dedications from several producers active in this region. Subject to regulatory approval, this acquisition is expected to close by the first half of 2017.

 

Plains All American announced that by the third quarter of 2017 it will expand the capacity of Cactus Pipeline to nearly 390,000 barrels per day.

 

The expansion is likely to be completed by the third quarter of 2017 and will help the partnership in moving increasing production volumes from the Permian Basin to Corpus Christi and other delivery points along the system. (Read More: Plains All American Announces Pipeline Capacity Expansion )

 

The partnership expects aggregate crude oil production on the dedicated acreage to multiply two times, over the next 2–3 years. In the said time period, the Permian Basin crude oil volumes have the capacity to grow as much as 50% or more. 

 

 

In the last one year Plains All American’s units returned 57.96%, outperforming the Zacks categorized Oil/ Gas Production Pipeline MLP industry’s gain of 32.39%. 

 

 

The partnership is well placed among its peers and enjoys a favorable financial position. Its strategic expansions triggered investors’ interest in the stock and boosted the share price. 

 

 

Plains All American carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is PBF Logistics LP sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

PBF Logistics LP’s 2017 Zacks Consensus Estimate moved up by nearly 7% to $2.30 per unit in the last 60 days.

 

 

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