Sunoco Logistics Partners (NYSE:SXL) has reached an agreement to buy the crude platform of energy and commodity trader Vitol Group in the Permian Basin in West Texas for US$760 million, the trading group said on Tuesday.
The acquisition will allow Sunoco Logistics to add a terminal with capacity of 2 million barrels of crude oil in Midland, Texas, as well as a crude oil gathering and mainline pipeline system in the Midland Basin. The deal also entails the purchase of the 50-percent stake in the SunVit Pipeline, which will make Sunoco the sole owner in SunVit.
Closing is expected in the fourth quarter of this year, and is contingent on certain closing conditions and regulatory approval.
"The addition of the Vitol system is an excellent synergistic fit to our growing crude platform in the Permian Basin. The Permian Basin is the most prolific of all of the US shale areas with strong growth expectations," Michael J. Hennigan, president and CEO at Sunoco Logistics, said.
Even at the low oil prices, which have forced shale producers to stop drilling in other shale plays, the Permian Basin is still an attractive investment and can still work at oil below US$50. Thus, oil companies are canceling projects nearly everywhere else and investing in the Permian, which has led to a hike in land prices in West Texas.
Related: Sunoco Logistics Buys Vitol's Assets In The Permian For $760M
Earlier this month, EOG Resources (NYSE:EOG) agreed to buy independent company Yates Petroleum Corporation in a stock-and-cash transaction worth US$2.5 billion, thus strengthening its presence in the Permian.
Then Apache Corporation (NYSE:APA) struck oil a region that no one would have expected. The believed to be clay-ridden region of the Permian Basin contains at least US$8 billion in oil, and there could be more. For years, geologists had explored and drilled down to find limited resources and an abundance of clay.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More