EnLink Midstream parnership supports Devon in Delaware Basin

By Patrick C. Miller | July 02, 2018

The EnLink Midstream companies—EnLink Midstream Partners and EnLink Midstream LLC—have formed a partnership to construct a new crude gathering system in the northern Delaware Basin of New Mexico.

The Avenger Crude Oil Gathering System is expected to significantly expand EnLink's gathering operations. The project is anchored by a 10-year contract with Devon Energy Corp. and supported by dedications from Devon's Todd and Potato Basin development areas in New Mexico. 

"EnLink has an established natural gas footprint in the Delaware Basin, and Avenger expands our service offerings by leveraging our crude gathering expertise to better serve our customers," said Michael Garberding, EnLink president and CEO. He added that the company has strong, long-term commercial relationship with Devon and that they have mutual commitment in regions in north Texas, central Oklahoma and now the Delaware Basin in New Mexico.

Devon earlier this year announced plans to direct a significant portion of its capital budget into Delaware Basin development. The EnLink partnership plans to invest approximately $35 million to $40 million of capital expenditures in the development of Avenger in 2018.

The additional capital expenditures are incremental to EnLink’s previously issued 2018 capital expenditures outlook for the partnership's crude and condensate segment. Further capital expenditures are expected in future years as Devon continues to develop its acreage in the Delaware Basin region. Initial operations are expected to begin during the third quarter of 2018.

EnLink said it is not constructing or operating Avenger through its Delaware Basin joint venture with NGP Natural Resources XI LP. Full-service operations should begin during the first quarter of 2019.

"Avenger is the third crude oil gathering platform in a high-growth basin that EnLink has announced over the last two years," Garberding said. "We expect these platforms to generate an attractive return—in the five to six times range—and provide long-term, stable cash flows."