Crestwood Equity Partners LP, an oil and gas pipeline operator will pay $1.8 billion for Oasis Petroleum Inc’s midstream subsidiary to expand its footprint in US shale regions.
The cash-and-stock agreement comes as oil and gas prices have risen to multi-year highs, bolstering investor confidence and driving mergers.
This enlarged footprint positions Crestwood to more aggressively pursue third party volumes as the commodity price outlook continues to be favorable for an acceleration of activity across the basin,” the business said in a statement, referring to the Williston basin in North Dakota.
Altus Midstream Co and BCP Raptor, a holding company for pipeline assets in the Permian Basin, announced a merger last week, with the combined business valued at $9 billion, including debt.
Crestwood anticipates that the Oasis sale will generate over $20 million in additional yearly cash flow over the next several years, with roughly $25 million in annual cost reductions anticipated shortly after the transaction closes in 2022.
Crestwood also stated on Tuesday that after the purchase completion, it plans to increase its payout to $2.62 per unit annually, up roughly 5% year over year.
In exchange for 33.8 million units owned in its midstream firm, Oasis Petroleum will get $150 million in cash and a total of 21 million units. It will also receive a cash payment of $10 million for its ownership of Oasis Midstream’s General Partner investment.
Oasis Midstream shareholders would get 12.9 million Crestwood units in exchange for 14.8 million shares owned. Oasis Midstream has an outstanding debt of around $660 million as of Sept. 30.
The merged companies’ enterprise value will be around $7 billion.
Oasis Midstream’s unitholders will own around 35 percent of Crestwood’s units, with Oasis Petroleum owning about 22 percent.
