Enterprise Products Partners L.P. (EPD) has completed the acquisition of a natural gas gathering affiliate from Occidental (OXY) for $580 million, significantly expanding EPD's operational footprint in the Permian Basin's Midland Basin and supporting OXY's debt reduction strategy.

Enterprise Products Partners Expands Permian Basin Footprint with Occidental Gas Gathering Asset Acquisition

Enterprise Products Partners L.P. (NYSE: EPD) has completed the acquisition of a natural gas gathering affiliate from Occidental (NYSE: OXY) for $580 million in cash, a move that significantly expands Enterprise's operational footprint in the Permian Basin's Midland Basin. This debt-free transaction underscores strategic realignments within the energy sector, as midstream operators aim to consolidate assets and producers divest non-core holdings to optimize balance sheets.

The Acquisition in Detail

The acquisition involves approximately 200 miles of natural gas gathering pipelines that support Occidental's production activities in the Midland Basin, providing Enterprise with access to over 1,000 drillable locations. This strategic expansion is consistent with Enterprise's focus on integrating with its existing infrastructure for long-term development visibility.

Complementing this, Enterprise plans to construct a new Athena natural gas processing plant, projected to commence service in the fourth quarter of 2026. This plant will have the capacity to process 300 million cubic feet per day of natural gas and extract up to 40,000 barrels per day (BPD) of natural gas liquids (NGLs). Upon completion, Enterprise's Midland Basin assets will be capable of processing 2.2 billion cubic feet per day of natural gas and extracting 310,000 BPD of NGLs. These investments, including the Athena plant and expansions, are factored into Enterprise's estimated growth capital expenditures of $4.0 billion to $4.5 billion for 2025 and $2.2 billion to $2.5 billion for 2026.

For Occidental, the divestment is part of its ongoing portfolio streamlining and debt reduction strategy, particularly following the CrownRock LP acquisition.

Market Reaction and Company Performance

Enterprise Products Partners (EPD) has seen market sentiment leaning uncertain to slightly bullish. The company maintains strong financial health, reporting an EBITDA of $9.5 billion over the last twelve months and revenue of $54.8 billion. Its debt-to-equity ratio stands at a conservative 1.11. EPD also boasts an impressive 7% dividend yield and a track record of 27 consecutive years of dividend increases. The stock has surged 16.3% over the past year, outperforming the industry's 10.3% improvement, largely driven by robust growth projects and a fee-based business model that supports stable revenue. Analyst consensus projects operating cash flow (OCF) per unit to increase by 6.9% to $4 in 2025, with further increases anticipated in 2026 and 2027. Despite a slight miss on earnings per share in the first quarter of 2025, revenue exceeded expectations. Some concerns exist regarding potential underutilization of newly developed assets in the Permian NGL value chain and the U.S. Department of Commerce's plans to deny EPD's requests to export ethane to China. Despite these concerns, analysts maintain a "Moderate Buy" consensus rating with a potential upside.

Occidental (OXY) has experienced a mixed to neutral market reaction. The transaction supports Occidental's strategy of asset divestiture aimed at debt reduction and portfolio strengthening. Since the CrownRock acquisition announcement, Occidental has achieved approximately $4 billion in total divestitures and successfully repaid $7.5 billion of debt since July 2024. The company expects to apply the $580 million from this sale to further debt reduction. Occidental's debt burden has been reduced by nearly 70% in under a year, with a debt-to-equity ratio of 0.75x and a net debt-to-EBITDA ratio of 1.77x, both below industry averages. The company reported $2.3 billion in unrestricted cash at the end of the second quarter of 2025. While OXY's stock jumped after its first-quarter 2025 earnings beat forecasts, it later faced pressure due to a downgrade by TD Cowen, citing changes in the oil market and increased volatility. Berkshire Hathaway's continued purchases of OXY shares signal confidence. As of September 2025, OXY's technical outlook is bearish, and analysts remain neutral.

Broader Market Implications

This acquisition by Enterprise Products Partners signals continued investment and confidence in the midstream energy sector, particularly within the Permian Basin. It indicates a sustained demand outlook for natural gas and natural gas liquids despite ongoing energy transition discussions. The broader energy sector, including EPD and OXY, has faced various headwinds in 2025. The recent OPEC+ decision in September 2025 to boost oil production by 547,000 barrels per day has sent shockwaves through energy markets, leading to Brent crude dropping to $68.18 per barrel and raising concerns about a looming oversupply. This environment suggests that midstream operators like EPD, with their fee-based models, are emerging as relatively safer investments amidst market volatility. Investor sentiment in the energy sector remains cautious, with a preference for firms demonstrating ESG alignment and hedging strategies.

Expert Commentary

A.J. "Jim" Teague, co-CEO of Enterprise's general partner, commented on the acquisition's strategic alignment:

"These agreements with Occidental are consistent with Enterprise's focus on expanding its Midland Basin franchise through organic investments in its midstream network and through targeted acquisitions that bolt-on to its existing infrastructure."

Occidental CEO Vicki Hollub affirmed the company's strategic direction regarding divestitures and debt reduction:

"These efforts strategically strengthen the portfolio, drive debt reduction, and create value for shareholders."

Looking Ahead

The successful integration of the acquired assets and the timely completion of the Athena processing plant will be crucial for Enterprise Products Partners to realize the full benefits of this expansion. Enterprise expects approximately $6 billion of major capital projects to enter commercial service in the second half of 2025, fueling accelerated growth into 2027. For Occidental, the focus will remain on further debt reduction and the disciplined allocation of capital, with approximately $6.8 billion allocated towards oil and gas operations in 2025, primarily in the U.S. onshore portfolio. Occidental is set to release its second-quarter 2025 financial results on August 6, 2025, which will provide further insights into its performance and the impact of its divestment strategy. The company's production strategy for 2025 guides total production at 1.385-1.445 MMboe. The long-term implications for both companies will depend on global energy demand, regulatory landscapes, and their continued strategic execution in a dynamic market.