Enbridge to Acquire Tallgrass Pipelines for $2.55B
by Jov Onsat | Rigzone Staff
Click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Enbridge Inc on Wednesday announced an agreement to buy Tallgrass Energy LP’s crude oil business for $2.55 billion in cash.
The acquisition includes a 75 percent stake in the Pony Express Pipeline, which carries up to about 460,000 barrels per day (bpd) of Rockies production to Cushing, Oklahoma, Canada’s Enbridge said in a press release Wednesday. The 1,500-mile line has access to around 500,000 bpd of refining capacity, Enbridge noted.
Enbridge also acquires Tallgrass’s 51 percent ownership in the Powder River Gateway system, which has two crude pipelines that can transport up to approximately 240,000 bpd combined.
The transaction also gives Enbridge about 8.4 million barrels of storage capacity across nine crude terminals connected to Pony Express, inclusive of a 60.3 percent interest in the Deeprock Crude Terminal in Cushing.
Stanchion Energy, Tallgrass’ marketing arm for the assets, is also part of the purchase.
“Pony Express is highly contracted throughout the decade with predominantly investment-grade counterparties”, Enbridge said. “Available takeaway capacity from the DJ/PRB remains closely aligned with expected basin production, supporting utilization and contract renewal expectations.
The acquisition includes a 75 percent stake in the Pony Express Pipeline, which carries up to about 460,000 barrels per day of Rockies production to Cushing, Oklahoma.
“The acquisition includes the PXP2 growth project, an incremental $0.3 billion expansion of Pony Express expected to increase capacity to approximately 515,000 bpd. PXP2 is underpinned by take-or-pay contracts, is expected to enter service in late 2027, and, upon closing of the transaction, will be added to Enbridge’s $41 billion secured growth backlog”.
The acquisitions provide “Enbridge with a strategic connection between the Bakken, Powder River Basin and Denver-Julesburg basins through Cushing and complements Enbridge’s existing Express-Platte system”, it added.
Enbridge expects to partly fund the acquisition with an equity offering, which would also fund the purchase of Salt Creek Midstream’s crude gathering business announced on August 26.
“Enbridge’s CAD 41 billion [around $29.7 billion] secured growth backlog is expected to be financed through the Company’s CAD 10 to CAD 11 billion of average annual growth capital investment capacity”, it said.
“The company is committed to maintaining its financial strength and continues to target leverage of 4.5x to 5.0x debt-to-adjusted EBITDA while retaining strong investment-grade credit ratings.
“The company is also reaffirming its medium-term outlook of approximately five percent compound average growth in EBITDA, DCF/share and EPS”.
Enbridge expects to complete the transaction by yearend subject to regulatory approvals including United States antitrust clearance.
Leadership Change
Concurrently Enbridge announced Greg Ebel will retire as president and chief executive on December 31 and that Michele Harradence, who has led Enbridge’s gas utilities since 2022, will succeed him. Ebel will serve as advisor to Harradence from January to May 2027.
“The CEO transition comes as Enbridge continues to deliver on its strategy of expanding its North American energy infrastructure platform, including its liquids pipelines, gas transmission and storage, natural gas utility and renewable power businesses”, the company said in a separate statement.
Harradence is currently Enbridge executive vice president and president for gas distribution and storage.
Her appointment “reflects her extensive leadership experience across Enbridge’s gas distribution and gas transmission and midstream businesses and her previous roles in the oil sands and in refining in Canada”, the company said.
Board chair Steve Williams said, “Few leaders have shaped Enbridge as profoundly as Greg Ebel. Before becoming President and CEO, Greg played an integral role in the transformational merger of Spectra Energy and Enbridge. As board chair, and then president and CEO, he has been instrumental in securing Enbridge’s CAD 41 billion growth project backlog, expanding Enbridge’s natural gas platform through the acquisition of three U.S. natural gas utilities from Dominion Energy, strengthening the company’s financial position, and advancing Enbridge’s voice on energy security, affordability and competitiveness”.
Enbridge said it had already planned for the leadership change. The succession planning was a “multi-year” process, it said.
by Jov Onsat | Rigzone Staff
Click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas