Sunoco Logistics Partners LP and ExxonMobil Corp. have formed a joint venture, Permian Express Partners LLC, combining certain crude oil logistics assets primarily in the Permian basin.
Sunoco will contribute its Permian Express 1, Permian Express 2, and Permian Longview and Louisiana Access pipelines to the JV, while ExxonMobil will contribute its Longview-to-Louisiana and Pegasus pipelines, Hawkins gathering system, an idle pipeline in southern Oklahoma, and its Patoka, Ill., terminal.
Sunoco says the JV establishes a stronger crude logistics network to meet market demand, provides additional takeaway opportunities for shippers, and expands ExxonMobil’s options to supply its network of refineries. Concurrent with the deal, ExxonMobil and its affiliates will enter into a preferred provider agreement with the JV. Sunoco will be the majority owner and operator of the JV’s assets.
Upon closing, ownership in Permian Express Partners will be Sunoco 85% and ExxonMobil 15%.
“This combination of certain strategic crude oil assets, together with our existing and recently acquired Midland basin assets, greatly enhances our service capabilities for the Permian basin, one of the most prolific shale areas with incredible growth opportunities,” commented Michael J. Hennigan, president and chief executive officer of Sunoco Logistics.
Sunoco this month completed an acquisition from Vitol Inc. for an integrated crude business in West Texas for $760 million plus working capital.
That deal included a 2 million-bbl crude terminal in Midland, Tex., a crude gathering and mainline pipeline system in the Midland basin including a large acreage dedication from an investment-grade Permian producer, and crude inventories related to Vitol's crude purchasing and marketing business in West Texas.
The deal also included the purchase of 50% interest in SunVit Pipeline LLC, which increased Sunoco’s overall ownership of SunVit to 100%. SunVit connects the Midland terminal to the Permian Express 2 pipeline.