Enterprise Products Climbs on $650M ExxonMobil Pipeline Deal
ExxonMobil will acquire a 40% stake in the Bahia NGL pipeline, a move that validates and helps fund a major expansion of the critical Permian-to-Gulf Coast infrastructure.
Enterprise Products Partners LP (NYSE: EPD) saw its shares gain in Wednesday trading after announcing a significant joint venture with ExxonMobil (NYSE: XOM) for its Bahia natural gas liquids (NGL) pipeline, a critical artery connecting the prolific Permian Basin to the Texas Gulf Coast.
Under the terms of the agreement, ExxonMobil will acquire a 40% undivided joint interest in the pipeline system. As part of the deal, ExxonMobil is set to contribute approximately $650 million, reflecting its share of the project's costs to date. Shares of Enterprise Products rose about 1% to $32.02 in morning trading, pushing the company’s market capitalization to over $68 billion.
The partnership serves as a major strategic endorsement for Enterprise's assets and growth plans. Securing a supermajor like ExxonMobil as an anchor shipper de-risks a massive capital project and ensures long-term volume commitments for Enterprise’s extensive NGL fractionation and storage complex in Mont Belvieu, Texas. For ExxonMobil, the deal secures vital and flexible transportation capacity for its rapidly expanding NGL production in the Permian Basin, connecting its upstream assets directly to its downstream processing and export operations.
The joint venture will facilitate a significant expansion and extension of the 550-mile pipeline. According to the company's official announcement, the initial capacity of 600,000 barrels per day (BPD) is slated to increase to 1 million BPD. The expansion will be supported by installing additional pumping capacity and includes a new 92-mile extension to ExxonMobil’s Cowboy natural gas processing plant. This expansion is expected to be completed by the fourth quarter of 2027.
This infrastructure build-out is critical to accommodate the forecasted growth in the region. Permian Basin NGL production is projected to grow by more than 30% between 2024 and 2030, creating a pressing need for additional takeaway capacity to prevent logistical bottlenecks.
"The Bahia pipeline is an essential project that will move abundant, affordable, and lower-emission NGLs from the Permian Basin to the Texas Gulf Coast," the companies stated, highlighting the strategic importance of the infrastructure for both the domestic and international markets.
While the market reaction was positive, initial analyst sentiment has been largely neutral, viewing the deal not as a surprise windfall but as a prudent, long-term strategic move. The partnership allows Enterprise to share the capital burden of the expansion while locking in a high-quality, long-term customer. The current analyst consensus price target for EPD sits at $35.61, suggesting Wall Street sees further upside beyond the immediate deal.
The transaction underscores the ongoing trend of consolidation and strategic partnerships in the U.S. midstream sector, as companies look to optimize capital allocation and secure long-term throughput for major infrastructure projects. For Enterprise, this partnership solidifies the Bahia pipeline's role as a cornerstone of the U.S. energy supply chain for years to come.