A subsidiary of EnLink Midstream Partners LP (NYSE: ENLK) plans to acquire a Permian Basin logistics company for $100 million, EnLink said Jan. 12.
LPC Crude Oil Marketing LLC operates crude oil gathering, transportation and marketing services in the Permian and buys, transports and sells about 60,000 barrels per day (bbl/d) of crude oil. The company serves as a link between Permian producers and end markets in West Texas and eastern New Mexico.
The acquisition expands service offerings in the Permian Basin for EnLink and its general partner EnLink Midstream LLC (NYSE: ENLC), 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 CEO. “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.”
Despite the continued loss of value in oil, the U.S. Energy Information Administration (EIA) said Jan. 12 that February oil and gas production in seven main producing regions would be lead by growth in the Permian.
LPC comes with an experienced management team that has built a highly respected crude oil marketing company known for customer service and performance, Davis said. In Upton and Martin counties, Texas, LPC has about 41 miles of pipeline in service, according to its website.
LPC’s assets include:
- Thirteen pipeline and refinery injection stations located in the most productive areas of the Permian;
- A fleet of 43 tractor trailers;
- Six crude oil gathering systems totaling 67 miles of pipeline; and
- An extensive crude oil first purchasing operation.
The transaction value represents a multiple of about 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 is expected to close in the first quarter of 2015. Following closing, LPC will operate as an indirect subsidiary of the partnership.
EnLink Midstream’s assets are located in many of North America’s premier oil and gas shales including the Barnett, Cana-Woodford, Arkoma-Woodford, Eagle Ford, Haynesville, Gulf Coast region, Utica and Marcellus.
Dallas-based EnLink Midstream’s assets include about 8,800 miles of gathering and transportation pipelines, 13 processing plants with 3.4 billion cubic feet per day of net processing capacity, seven fractionators with 252,000 bbl/d of net fractionation capacity and many other assets.
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