Five Point reportedly discussing sale in US of Northwind to MPLX for $2.3bn

Five Point Infrastructure is reportedly in talks to sell Northwind Midstream Partners to MPLX. Citing sources familiar with the matter, Bloomberg reported on July 30 that a deal could be reached in the coming weeks and could be worth $2.3bn.

Five Point is a private equity and infrastructure investment firm that has roughly $8bn of assets under management across multiple investment funds, according to its website. Northwind, one of its portfolio companies, operates a midstream gas system focused on sour gas gathering and processing in Lea County, New Mexico, within the Permian Basin’s Delaware sub-basin.

According to Northwind’s website, its assets include over 220 miles (354 km) of low- and high-pressure pipelines, five compressor stations, a treating and sequestration facility with capacity of more than 200mn cubic feet (5.7mn cubic metres) per day and two acid gas injection wells. The company’s gathering system receives sour gas – which is high in carbon dioxide (CO2) and hydrogen sulphide (H2S) – at producer receipt points and delivers it to Northwind’s Titan facility for treatment.

Northwind says it has multiple expansions underway on the system, which is being designed to ultimately have over 400 mmcf (11.3 mcm) per day of contemplated gas treating capacity.

The latest report comes after Reuters said in May, citing sources familiar with the matter, that Five Point was exploring a potential sale of Northwind. Those sources said at the time that any deal was expected to value the company upwards of $2bn including debt.

This comes as midstream dealmaking has been picking up pace, even as upstream mergers and acquisitions (M&A) have been slowing. Indeed, MPLX also agreed in February to acquire the remaining 55% interest in BANGL natural gas liquids (NGLs) system in the Permian from affiliates of WhiteWater and Diamondback Energy for $715mn.

MPLX, which is owned by Marathon Petroleum, has a market value of about $53bn after rising by more than 20% in the last 12 months, Bloomberg noted.

The news service’s sources warned, however, that a deal was not guaranteed and a deal could yet stall or fall through altogether.

As is common in such M&A cases, none of the companies involved have commented publicly on the matter.