Photographer: Brent Lewin/Bloomberg

Pipeline Operator Oryx Midstream Mulls $3 Billion Sale

  • Enterprise, Magellan, Valero are said to show interest
  • Oryx is also said to consider an initial public offering

Oryx Midstream Services LLC, a Texas oil pipeline operator backed by Quantum Energy Partners and other investors, is weighing a sale or initial public offering that could value the company at as much as $3 billion, according to people familiar with the matter.

The Midland, Texas-based company is working with Jefferies Group and Citigroup Inc. to evaluate both options, said the people, who asked not to be identified because the process is private. No final decisions have been made and the company may choose not to proceed with a sale or IPO, they said.

Oryx’s advisers sent offering documents to potential buyers this week and the company has drawn interest from Enterprise Products Partners LP, Magellan Midstream Partners LP and Valero Energy Corp., among others, the people said.

Representatives of Jefferies and Citigroup declined to comment. Representatives of Oryx, Quantum, Enterprise Products, Magellan and Valero didn’t immediately return calls seeking comment.

Pipeline operators such as Oryx that operate in the Permian Basin, the most productive oilfield in the U.S., have been at the center of a takeover boom this year. Blackstone Group LP, Targa Resources Corp., Plains All American Pipeline LP and NuStar Energy LP announced deals for Permian pipeline operators this year totaling more than $5 billion.

Laredo Petroleum Inc. and Energy & Minerals Group announced plans to sell Medallion Gathering & Processing LLC in July. Medallion could fetch about $2.5 billion in a sale, people familiar with the matter said at the time.

Oryx secured a commitment of as much as $300 million in 2014 from Wells Fargo & Co.’s energy investing arm and private equity firms Quantum and Post Oak Energy Capital.

It operates a network of pipelines that collects oil from wells in a fast-growing swath of the Permian called the Delaware Basin, according to its website.

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