Crestwood Equity Partners LP and Oasis Midstream Partners LP have agreed to merge in an equity and cash transaction valued at about $1.8 billion.
Crestwood will acquire Oasis Midstream in a deal that adds to its position in the Williston and Delaware basins, enables operational, commercial, and capacity synergies, and expands the long-term contract acreage and inventory dedications of its gathering and processing portfolio, said Robert G. Phillips, chairman, president, and chief executive officer of Crestwood.
In the Williston basin, the deal adds crude oil, produced water gathering, and natural gas gathering and processing assets, doubles the inventory of tier 1 drilling locations dedicated to Crestwood’s assets to about 1,200 locations across 535,000 dedicated acres and expands Crestwood’s reach into the western and northern parts of the basin, the company said in the Oct. 26 release.
In the Delaware basin, the acquired assets provide crude oil and produced water gathering services in Loving, Ward, and Winkler counties in Texas, complementary to Crestwood’s existing Nautilus natural gas gathering system and Desert Hills produced water gathering system.
Crestwood expects to capture over $20 million in incremental annual cash flow over the next several years through the integration of the assets. In the Williston basin, Crestwood expects to connect its Arrow system with Oasis Midstream’s Wild basin system and the combined footprint will have 430 MMcfd of total processing capacity and current natural gas throughput of about 330 MMcfd.
Additionally, Crestwood has identified about $25 million in annual cost synergies that it expects to realize shortly after close in 2022, driven by operations and maintenance reductions from the overlapping asset footprints and the elimination of duplicative G&A expenses.
Under the agreement, Oasis will receive $150 million in cash plus an aggregate of 21 million common units for its 33.8 million common units held in Oasis Midstream. Oasis Midstream public unitholders will receive an aggregate of 12.9 million Crestwood common units for the 14.8 million Oasis Midstream common units outstanding, representing a transaction value of $1.8 billion, including assumption of outstanding debt of about $660 million.
Oasis Petroleum will receive a $10 million cash payment for its ownership of the general partner interest of Oasis Midstream. Upon closing, Oasis Midstream former unitholders will own about 35% of Crestwood’s outstanding common units, of which, some 22% will be owned by Oasis Petroleum.
Oasis is expected to hold the right to appoint two directors to the board.