Noble Midstream Partners LP and Greenfield Midstream LLC announced Tuesday they’ve exercised their option to acquire a 20% interest in the Saddlehorn Pipeline for $155 million gross, $84 million net to Noble Midstream, Kallanish Energy reports.

The deal diversifies the companies’ Black Diamond Gathering LLC joint venture into downstream long-haul opportunities and provides customer optionality to Cushing, Oklahoma.

Saddlehorn currently is jointly owned by affiliates of Magellan Midstream Partners L.P., Plains All American Pipeline L.P., and Western Midstream Partners LP. Current capacity is roughly 190,000 barrels per day of crude oil and condensate from the DJ and Powder River basins to storage facilities in Cushing. Magellan is the pipeline’s operator.

“This accretive transaction represents a rare opportunity to buy into a largely contracted pipeline with high-quality producers and midstream operators,” said Robin Fielder, president and chief operating officer of Noble Midstream.

Following a successful open season, Saddlehorn is expanding by 100,000 Bpd. The incremental capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities. There will be no additional capital required by Black Diamond in 2020 for the pipeline expansion.

Noble Midstream expects the acquisition to be leverage-neutral to 2020 credit metrics and expects to pay for the acquisition through cash on hand and a revolving credit facility. The effective date of the transaction was Feb. 1.

Noble Midstream operates Black Diamond, which includes roughly 300,000 barrels per day of delivery capacity and 390,000 Bpd of crude oil storage capacity, all in the DJ Basin. Greenfield Midstream owns 45.6% of Black Diamond.

This post appeared first on Kallanish Energy News.