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Enbridge Inc. agreed on Sept. 7 to acquire Moda Midstream LLC in a $3 billion cash deal that the Calgary, Alberta-based company said significantly advances its U.S. Gulf Coast export strategy.
“Over the last several years we’ve been building a strong position in the U.S. Gulf Coast through both natural gas and crude infrastructure,” commented Al Monaco, president and CEO of Enbridge, in a company release. “Our strategy is driven by the important role that low cost, sustainable North America energy supply will play in meeting growing global demand.”
Moda Midstream is a liquids terminaling and logistics company backed by EnCap Flatrock Midstream. Among its assets, the company operates the nation’s largest crude export terminal by volume located in Ingleside, Texas, near Corpus Christi, which includes very large crude carrier capability and 1.5 million bbl/d of export capacity.
In 2020, the Moda Ingleside Energy Center—to be renamed the Enbridge Ingleside Energy Center—loaded 25% of all U.S. Gulf Coast crude exports, according to the company release. Moda had acquired the Ingleside Energy Center from Occidental Petroleum Corp. in 2018.
“With close proximity to world-class Permian reserves,” Monaco continued, “and with cost effective and efficient export infrastructure, our new Enbridge Ingleside terminal will be critical to capitalizing on North America’s energy advantage.”
Enbridge values the Moda transaction at approximately eight times projected forward EBITDA. Upon closing, expected for fourth quarter, is projected to be immediately accretive to Enbridge’s financial outlook.
At closing, Moda Executive Vice President, COO and Founder Javier del Olmo will join Enbridge as vice president of U.S. Gulf Coast terminaling operations. Additionally, key Moda personnel and the entire Ingleside Energy Center team will join Olmo at Enbridge as the core of the new U.S. Gulf Coast terminaling team in Enbridge’s liquids pipelines business unit.
Other assets included in the transaction are Moda’s Taft Terminal located near the Ingleside Energy Center, a minority, nonoperating interest in the Cactus II Pipeline, a 100% interest in Moda’s Viola Pipeline and Moda’s St. James Development Project, a brownfield joint-development opportunity to build independent third-party logistics solutions for customers in the St. James, Louisiana, area. Both the Cactus II and Viola pipelines connect to the Ingleside Energy Center.
Moda and EnCap Flatrock Midstream will retain ownership in Vopak Moda Houston, a world-class deepwater storage and terminaling facility in the Port of Houston.
Vopak Moda Houston is the first greenfield terminal development in the port in more than a decade and will serve as a vital growth platform for its joint-venture partners, Royal Vopak and Moda Midstream. Vopak Moda Houston recently commissioned its deepwater dock and has constructed storage and terminaling infrastructure for its industrial gas product line.
To execute on continued growth at Vopak Moda Houston and other terminaling opportunities, Moda Midstream President, CEO and Founder Bo McCall will become chairman of Moda Midstream, and current executive vice president, CFO and founder, Jonathan Ackerman, will serve as president and CEO. Ian Levine, Moda’s current vice president of corporate strategy and treasurer will become vice president of strategy and CFO.
“When we first backed the Moda management team, we had high expectations of what this talented group would achieve,” said EnCap Flatrock Managing Partner Billy Lemmons in a company release.
“Bo, Jon, Javier and their outstanding team have exceeded our every expectation. This is a significant transaction that will produce strong results for our investors and add value to Enbridge’s impressive asset portfolio.”
“In addition,” he continued, “we are excited to continue our partnership with the Moda team to further enhance Vopak Moda Houston’s growth and development and explore new opportunities.”
Credit Suisse Securities (USA) LLC was exclusive financial adviser to Moda, and Vinson & Elkins LLP, led by partners Alan Beck and Matt Falcone, acted as legal counsel. Shearman & Sterling acted as legal counsel to EnCap Flatrock. Barclays was financial adviser to Enbridge, and Sidley Austin LLP, led by Atman Shukla, provided legal counsel.
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