Devon, Crosstex Energy to merge midstream assets

Devon Energy Corp., Oklahoma City, and Dallas-based Crosstex Energy LP reported Oct. 21 the signing of a definitive agreement to combine substantially all of Devon’s US midstream assets with those of Crosstex to form a new midstream business.

The new business—yet to be named—will consist of two publicly traded entities: a master limited partnership (MLP) and a general partner (GP) entity.

“The combination of Devon’s and Crosstex’s extensive midstream systems, including gathering and transportation pipelines, and processing, fractionation, and logistics assets, provides the new company with diversification and scale, along with an enhanced liquids-oriented growth profile,” the companies said.

Both companies’ assets are in the Barnett shale, Permian basin, Cana and Arkoma Woodford, Eagle Ford, Haynesville, Gulf Coast, Utica, and Marcellus. The new company will have 7,300 miles of gathering and transportation pipelines, 13 processing plants with 3.3 bcfd of net processing capacity, 6 fractionators with 165,000 b/d of net fractionation capacity, as well as barge and rail terminals, product storage facilities, brine disposal wells, and an extensive crude oil trucking fleet.

Deal’s terms

Under the terms of the agreement, in exchange for a controlling interest in both the GP entity and the MLP, Devon will contribute its equity interest in a newly formed Devon subsidiary (Devon Holdings) and $100 million in cash. Devon Holdings will own Devon’s midstream assets in the Barnett shale in North Texas, the Cana and Arkoma Woodford shales in Oklahoma, and Devon’s interest in Gulf Coast fractionators in Mt. Belvieu, Tex. The MLP and the GP entity will each own 50% of Devon Holdings.

Current stockholders of Crosstex will receive one unit in the GP entity for each share of Crosstex they own, as well as a one-time cash payment at closing of $2/share, or $100 million in aggregate. Devon’s contributed assets are valued at $4.8 billion in the transaction.

Following close of the deal, the new company will be headquartered in Dallas with a continued employee presence in Oklahoma City.

The boards of directors of both Devon and Crosstex have unanimously approved the transaction. Until the transaction has closed, Devon’s midstream business and Crosstex will continue to operate as separate, independent companies.

Related Articles

OTC: Total suggests Shanghai as Asian natural gas hub

05/07/2014 Shanghai, China, would be a natural geographic and market position for a natural gas hub in Asia, according to Laurent Maurel, Total senior vice-pr...

OTC: Robust US energy policy needed to strengthen economy, lawmaker says

05/07/2014 Anticipated energy demand worldwide by 2050 will be such that industry will need to produce similar levels of oil and natural gas compared with tod...

EIA forecasts higher summer gasoline prices

05/07/2014 According to the US Energy Information Administration’s most recent Short-Term Energy Outlook (STEO), regular gasoline retail prices are projected ...

Encana to acquire Eagle Ford acreage for $3.1 billion

05/07/2014 Encana Oil & Gas Inc., a wholly owned subsidiary of Encana Corp., has reached an agreement with Freeport-McMoRan Oil & Gas LCC, a subsidiar...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected