EnLink Midstream Partners acquires E2 assets

EnLink Midstream Partners, LP (ENLK) has acquired equity interests in E2 Appalachian Compression, LLC and E2 Energy Services, LLC from EnLink Midstream, LLC (ENLC). The total consideration for the transaction is approximately US$ 193 million, including a cash payment of US$ 163 million and approximately 1.0 million ENLK units. ENLC expects to use the majority of the cash it received in the transaction to repay indebtedness. This transaction marks the first drop down from ENLC to ENLK as part of the partnership’s strategic growth plan.

EnLink Midstream’s strategy in the Utica and Marcellus shale plays is primarily focused on stabilising and transporting condensate via pipeline, rail, barge and trucking operations. The addition of the E2 assets further builds upon the partnership’s existing platform in the region, where EnLink Midstream expects to have invested approximately US$ 700 million by the end of 2015, including the drop down of E2. The E2 assets are supported by a long-term, fee-based contract, including minimum volume commitments, with Antero Resources (AR), one of the most active drillers in the Utica and Marcellus region. Once all the E2 stabilisation and compression facilities are complete in the first half of 2015, they are expected to generate approximately US$ 20 - 25 million per year of adjusted EBITDA. Adjusted EBITDA is explained in greater detail under “Non-GAAP Financial Information.”

“We continue to make significant progress and enhance our position for substantial growth in the Utica and Marcellus shale plays,” said Barry E. Davis, EnLink Midstream President and Chief Executive Officer. “Our relationship with Antero Resources, a leading oil and gas exploration and production company in the region, is a key component of this growth, and we expect additional opportunities from our expanded platform in the region.

“Unitholders of ENLK and ENLC will continue to benefit from this and future drop down transactions, which is one of several strategies for growth. We expect additional drop downs of assets held by our General Partner as well as assets held by our sponsor, Devon Energy Corporation. These types of transactions support our ability to double the size of the company by 2017.”

E2’s assets include five condensate stabilisation and natural gas compression stations with combined capacities of 19 000 bpd of condensate stabilization and 580 million ft³/d of natural gas compression. Currently, three of the five stations are in service and commercial start-up of the two remaining stations is expected in the first half of 2015. By the end of 2015, EnLink Midstream’s assets in the Ohio River Valley are expected to include approximately 250 miles of crude and stabilised condensate pipelines, 11 condensate stabilisation and gas compression stations with a total capacity of approximately 60 000 bpd of condensate and approximately 1.2 billion ft³/d of natural gas compression, over 110 trucks and rail and barge terminals.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/23102014/enlink-midstream-partners-acquires-e2-assets-946/