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Noble Midstream (NBLX) & Chevron Boost Presence in DJ Basin

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Noble Midstream Partners LP has inked a deal with Chevron Corporation’s (CVX - Free Report) unit to provide oil transmission services for long-distance transportation out of the DJ Basin. The services will be carried out from the Wells Ranch development area to Platteville.

In December, 2020, Noble Midstream successfully merged its business with Chevron following the acquisition of its parent entity Noble Energy Inc. by the latter. The recent deal is the first business agreement of the partnership with Chevron.

Details of the Deal

With the completion of this pact, the partnership will be responsible for substantially all crude oil gathering and intermediate oil transportation services from the Wells Ranch development area.

Concurrently, it entered into a lease agreement with the subsidiary of Energy Transfer LP (ET - Free Report) to utilize substantial capacity of the latter’s Wattenberg Oil Trunkline (WOT) through 2031.The in-service pipeline ends in Platteville where the partnership has an extensive existing infrastructure and storage capacity with access to all four major pipelines in the DJ Basin.

Benefits of the Deal

This deal is in line with the partnership’s aim to diversify its cash flow profile and provide operational support and value to both Chevron and the partnership. Also, it will add third-party business to Noble Midstream and further bolster its already establishedpresence in the DJ Basin.

Notably, Noble Midstream expects to generate a substantial cash flow, which will exceed its capital expenditure in 2021 to reduce debt and maintain an excellent balance sheet.

Price Performance

The stock has gained 68.2% in the past six months, outperforming the industry’s rise of 62.7%.

Zacks Rank & Key Pick

Noble Midstream currently carries a Zack Rank #5 (Strong Sell).

A better-ranked player in the same industry is Diamondback Energy, Inc. (FANG - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Diamondback Energy is expected to see earnings growth of 21.9% in the long term (three to five years). It delivered an earnings surprise of 121.2% in the trailing four quarters, on average.

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