Canadian pipeline giant Enbridge is buying a U.S. midstream operator for US$3 billion, betting on advancing its strategy to export from the U.S. Gulf Coast low-cost crude from the Permian and Eagle Ford basins.
Enbridge has entered into a definitive purchase agreement with EnCap Flatrock Midstream to buy Moda Midstream Operating for US$3.0 billion in cash, subject to closing adjustments, the Canadian firm said on Tuesday.
The transaction is expected to close in the fourth quarter of this year, subject to customary regulatory approvals and closing conditions. Upon closing, the deal will be immediately accretive to Enbridge's financial outlook, the company said.
As part of the agreement, Enbridge will buy a 100-percent operating interest in the Ingleside Energy Center near Corpus Christi, Texas-North America's largest crude export terminal. The center will be renamed the Enbridge Ingleside Energy Center (EIEC).
Last year, the Corpus Christi terminal loaded 25 percent of all U.S. Gulf Coast crude exports, says Enbridge.
"EIEC's highly advantaged outer harbor location, with direct connection to low-cost, long-lived supply, combined with VLCC capability and rapid loading rates, position it as one of the most competitive export facilities globally," the company noted.
Enbridge will also buy 20 percent in the 670,000-bpd Cactus II Pipeline, 100 percent in the 300,000-bpd Viola pipeline, and 100 percent in the 350,000-barrel Taft Terminal.
"We're very excited about acquiring North America's premium, very large crude carrier (VLCC) capable, crude export terminal," Enbridge's president and CEO Al Monaco said.
"Our strategy is driven by the important role that low cost, sustainable North America energy supply will play in meeting growing global demand. With close proximity to world-class Permian reserves, and with cost effective and efficient export infrastructure, our new Enbridge Ingleside terminal will be critical to capitalizing on North America's energy advantage," he added.
Enbridge could also help boost Canada's oil sands pipeline takeaway capacity as soon as this month, if the Line 3 replacement program enters into service.
By Tsvetana Paraskova for Oilprice.com
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