Enbridge sells U.S. midstream business for $1.12 billion

By Patrick C. Miller | May 15, 2018

Enbridge Inc. has announced that its indirect subsidiary—Enbridge (U.S.) Inc.—has entered into a definitive agreement to sell Midcoast Operating LP and its subsidiaries to AL Midcoast Holdings LLC for $1.12 billion.

Midcoast conducts the company's U.S. natural gas and natural gas liquids (NGL) gathering, processing, transportation and marketing businesses, serving established basins in Texas, Oklahoma, and Louisina. AL Midcoast is an affiliate of ArcLight Capital Partners. The transaction is expected to close in the third quarter of 2018.

"The sale of Midcoast is an important step in our shift towards a pure regulated pipeline and utility model, and positions us well to achieve our goal of selling CAD$3 billion in non-core assets in 2018," said Al Monaco, Enbridge president and CEO. "This transaction includes our 100-percent-owned gathering and processing assets in Texas and Oklahoma. Proceeds from the sale will be used to accelerate the strengthening of our balance sheet and enhance the financial flexibility to fund our industry leading CAD$22 billion secured growth program."

The Midcoast businesses include natural gas gathering, treating, processing and transportation, as well as NGL transportation assets located in the east Texas, western Anadarko and Barnett shale plays and consist of approximately 11,200 miles of natural gas gathering and transportation pipelines, 2.075 million cubic feet per day (MMcf/d) of natural gas processing capacity and 1,330 MMcf/d of treating capacity.

Other assets include an NGL logistics and marketing business (including ELTM, L.P. and Enbridge Marketing (U.S.) L.P.), and a 35 percent interest in Texas Express Pipeline, consisting of a 594-mile, 20-inch NGL pipeline and a 35 percent interest in Texas Express Gathering, consisting of 115 miles of NGL pipelines and other NGL infrastructure comprising the company's Texas Express NGL pipeline system.

"I'd like to thank our colleagues at Midcoast who have done an exceptional job running the business safely and reliably day-in and day-out. This sale places great people and great assets in a strong position for future growth," Monaco said.

AL Midcoast intends to maintain Midcoast's workforce and anticipates that they will join AL Midcoast upon transaction close. AL Midcoast intends to retain a Houston presence. Enbridge will work with AL Midcoast to ensure a safe transition of Midcoast's operations.

Citi acted as financial advisor and Norton Rose Fulbright US LLP acted as legal advisor to Enbridge on the transaction.