EnLink Midstream to acquire Permian Basin crude oil logistics company

The EnLink Midstream companies, EnLink Midstream Partners, LP (the Partnership) and EnLink Midstream, LLC (the General Partner) have announced that a subsidiary of the Partnership has signed a definitive agreement to acquire LPC Crude Oil Marketing LLC (LPC), which has crude oil gathering, transportation and marketing operations in the Permian Basin, for approximately US$100 million, subject to certain adjustments.

LPC currently purchases, transports and sells approximately 60 000 bpd of crude oil, serving as a critical link between Permian producers and end markets. The acquisition expands EnLink’s service offerings in the Permian Basin, adding crude oil first purchasing and logistics capabilities to EnLink’s existing natural gas gathering and processing services.

“The acquisition of LPC is a great example of our M&A strategy, which is one of our four avenues of growth,” said Barry E. Davis, EnLink Midstream President and Chief Executive Officer. “Even with the recent decline in oil prices, we believe that the Permian Basin will remain a core growth area for oil production. This acquisition enhances EnLink’s ability to provide a complete midstream solution to customers in one of the most active producing basins in North America, and our plan is to make additional investments expanding LPC’s business over time.

“This business comes with an experienced management team that has built a highly respected crude oil marketing company known for customer service and performance,” Davis added. “We are excited to welcome LPC’s dedicated team of employees into the EnLink family.”

LPC’s assets include:

  • Thirteen pipeline and refinery injection stations, which are located in the most productive areas of the Permian Basin.
  • A fleet of approximately 43 tractor trailers.
  • Six crude oil gathering systems totalling 67 miles of pipeline.
  • An extensive crude oil first purchasing operation.

The transaction value represents a multiple of approximately eight times current run-rate adjusted EBITDA. EnLink expects the acquisition to generate follow-on investment opportunities that will lower the acquisition multiple over time. The acquisition, which is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals, is expected to close in the first quarter of 2015. Following the closing of the transaction, LPC will operate as an indirect subsidiary of the Partnership. The highly skilled management team and employees of LPC will remain with EnLink and will provide expertise in crude oil first purchasing and logistics.

Adapted from press release by Rosalie Starling

Published on 13/01/2015

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