Sunoco, Energy Transfer announce crude oil joint venture for Permian Basin

On Monday, Sunoco LP and Energy Transfer LP announced they had entered into a joint venture in the Permian Basin.

The joint venture will make use of the two companies’ crude oil and produced water gathering assets. Officials said Energy Transfer will serve as the operator of the joint venture. Both Energy Transfer and Sunoco will combine their Permian crude oil, while Energy Transfer will add in its produced water gathering assets. Energy Transfer’s long-haul crude pipeline network is excluded from the joint venture.

Combined the two companies will operate more than 5,000 miles of crude oil and water gathering pipelines with crude oil storage capacity in excess of 11 million barrels, officials said. Energy Transfer will hold a 67.5 percent interest in the venture with Sunoco holding the rest.

The venture, advised by Intrepid Partners, LLC for Energy Transfer and Guggenheim Securities, LLC for Sunoco, is effective as of July 1 and is expected to be “immediately accretive to distributable cash flow per LP unit for both Energy Transfer and Sunoco,” officials said. Other counsel for the firms included Potter Anderson & Corroon LLP for Energy Transfer’s conflicts committee, and Richards, Layton & Finger, P.A. acted for Sunoco’s special committee. Vinson & Elkins LLP and Akin Gump Strauss Hauer & Feld LLP also acted as legal counsel to the partnerships.

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