Oil rigs sit in a storage yard in the Permian Basin outside of Odessa, Texas, U.S. February 18, 2025.
Jefferies Financial Group investment bankers have recently begun approaching potential buyers, including midstream companies and investment firms, to gauge interest in MSIP’s controlling stake in Brazos. The sources, who requested anonymity due to the private nature of the discussions, noted that the sale process is ongoing, and a transaction may not occur. MSIP could also opt to retain its investment.
A Morgan Stanley spokesperson stated: “We are constantly evaluating opportunities to optimize our portfolio, but we do not comment on specific transactions.” Representatives from Brazos Midstream II and Jefferies also declined to provide comments.
MSIP initially acquired Brazos Midstream II in 2018 for $1.75 billion. Later that year, Williams Companies contributed assets to Brazos in exchange for a 15% stake. Sources indicated that Williams is not expected to bid for MSIP’s majority stake in the current sale process, and Williams did not respond to requests for comment.
The potential sale aligns with a wave of recent midstream transactions in the U.S. shale industry, where privately owned pipeline companies are being acquired by publicly listed infrastructure operators aiming to expand their operations. Notable deals include Energy Transfer’s $3.25 billion acquisition of WTG Midstream from a group led by Stonepeak, ONEOK’s $2.6 billion purchase of Medallion Midstream from Global Infrastructure Partners, and Kinetik’s $765 million acquisition of Durango Permian from an affiliate of Morgan Stanley Energy Partners.
The exploration of a sale reflects MSIP’s strategy to capitalize on the value of its Brazos Midstream II investment while the midstream sector experiences heightened deal activity. The outcome of the sale process will depend on buyer interest and market conditions, but a successful transaction could further consolidate infrastructure assets in the Permian Basin, a key hub for U.S. energy production.
