EnLink Midstream enters Permian basin through acquisitions

April 1, 2015
EnLink Midstream made two acquisitions early this year to give it a position in the Permian basin. An EnLink subsidiary said it would buy LPC Crude Oil Marketing LLC, and then days later, EnLink agreed to acquire Coronado Midstream Holdings LLC, which owns gas-gathering systems and processing facilities.


EnLink Midstream made two acquisitions early this year to give it a position in the Permian basin. An EnLink subsidiary said it would buy LPC Crude Oil Marketing LLC, and then days later, EnLink agreed to acquire Coronado Midstream Holdings LLC, which owns gas-gathering systems and processing facilities.

"In just over 4 months, we have announced approximately $1 billion of acquisitions, which is consistent with our growth strategy to expand our platform in key producing areas," said Barry E. Davis, EnLink president and chief executive officer. A September 2014 deal involved Gulf Coast gas pipeline assets.

On Feb. 2, EnLink announced plans to acquire Coronado for $600 million. Coronado operates three cryogenic gas processing plants and a gas-gathering system in the North Midland basin, including 270 miles of gathering pipelines, 175 MMcfd of processing capacity, and 35,000 hp of compression.

Construction is under way on another 100 MMcfd of processing capacity and gathering system expansions of the Coronado system.

Coronado’s key assets were built in the past 5 years, and the system has current inlet volumes of 100 MMcfd. EnLink plans to connect the Coronado system with its Bearkat system to create a multicounty rich gas gathering and processing system (OGJ Online, Sept. 24, 2014).

The Coronado system is underpinned by long-term contracts, which include production from more than 190,000 acres. Coronado’s key producer customers include Reliance Energy Inc., Diamondback Energy Inc., and RSP Permian Inc. Reliance is the largest owner of Coronado, with affiliates of both Diamondback and RSP Permian owning the remainder.

The owners of Coronado will receive $240 million in cash, $180 million of partnership common units, and $180 million of a new class of Partnership common units, subject to certain adjustments.

In January, an Enlink subsidiary agreed to buy LPC Crude Oil Marketing, which has crude oil gathering, transportation, and marketing operations in the Permian. That deal was for $100 million (OGJ Online, Jan. 13, 2015).

LPC purchases, transports, and sells about 60,000 b/d. The acquisition adds crude oil purchasing and logistics to EnLink’s existing Permian gathering and processing services.

EnLink is acquiring LPC’s 13 pipeline and refinery injection stations, a fleet of 43 tractor trailers, six crude oil gathering systems totaling 67 miles of pipeline, and a crude oil first-purchasing operation.

In September 2014, EnLink agreed to acquire Gulf Coast gas pipeline assets, including the Bridgeline system predominantly residing in southern Louisiana, from Chevron Pipe Line Co. and Chevron Midstream Pipelines LLC for $235 million (OGJ Online, Sept. 29, 2014).

"EnLink is a strong vehicle for sustainable growth, due in large part to our current financial position, which allows us to effectively expand in times like these," Davis said.