EnLink Midstream LLC (ENLC) Update - May 26

EnLink Midstream LLC (ENLC) Update - May 26

Postby dan_s » Thu May 26, 2022 8:30 am

EnLink Midstream agrees to acquire North Texas gathering and processing system

EnLink announced that it has entered into a definitive agreement to acquire North Texas gathering and processing assets from Crestwood Equity Partners LP (CEQP) for $275M, subject to certain customary adjustments and regulatory approval.

The adjacency of the assets to EnLink's North Texas footprint provides significant synergies and the opportunity to redeploy assets to EnLink's other areas of operation, resulting in significant capital avoidance and driving attractive transaction economics.

The assets to be acquired are expected to provide significant synergies, minimal integration capital, and significant capital avoidance for EnLink through planned redeployment of assets to EnLink's other segments, including the Permian segment in the near-term and the Carbon Solutions business in the future.

As a result, the transaction represents attractive economics of approximately 4.0x EBITDA and an unlevered return in the high teens.

EnLink expects that the robust cash flow generation from the assets, in addition to the significant reduction to EnLink's 2023 capital expenditures driven by redeployment of assets, would result in significant 2023 cash flow accretion and a leverage neutral transaction.

The acquisition is also expected to improve EnLink's emission intensity profile in North Texas with a high mix of electric compression. Additionally, the assets provide the potential for incremental carbon capture, utilization, and sequestration (CCUS) opportunities aimed at meeting EnLink's carbon intensity reduction objectives.

The assets to be acquired would expand EnLink's position in the prolific Barnett Shale producing basin with proximity to existing and planned liquefied natural gas export facilities along the Gulf Coast. These assets include 500 miles of lean and rich gas gathering pipeline and three processing plants with 425M cubic feet per day (MMcf/d) of capacity, which will be available for future relocation.

Rick Fier | Managing Director
Cowen Outsourced Trading
Dan Steffens
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