Enbridge advances on US Gulf Coast: acquires first crude export facility in North America

Enbridge Inc. announces that it has entered into a definitive purchase agreement with EnCap Flatrock Midstream to acquire Moda Midstream Operating, LLC for US $ 3.0 billion in cash, subject to closing adjustments. The acquisition will significantly advance the company’s export strategy to the US Gulf Coast and connectivity to low-cost, long-life reserves in the Permian and Eagle Ford basins. The Company values ​​the transaction at approximately 8 times projected forward EBITDA and at closing is expected to have an immediate impact on Enbridge’s financial outlook.

Al Monaco, President and CEO of Enbridge, said: “We are very excited to acquire the premium crude export terminal capable of transporting very large crude to America. North. Over the past few years, we have built a solid position on the US Gulf Coast through our natural gas and crude infrastructure. Our strategy is driven by the important role that North America’s sustainable, low-cost energy supply will play in meeting growing global demand. Close to the world-class Permian reserves and with a cost-effective and efficient export infrastructure, our new Enbridge Ingleside terminal will be essential in leveraging North America’s energy advantage.

At the heart of the transaction, Enbridge will acquire a 100% operating stake in the Ingleside Energy Center (to be renamed Enbridge Ingleside Energy Center (EIEC)), located near Corpus Christi, Texas – the largest export terminal of crude oil from North America, which accounted for 25% of all US Gulf Coast crude exports in 2020. This state-of-the-art terminal, built in 2018, includes 15.6 million barrels of storage and 1 , 5 million barrels per day of export capacity.

EIEC’s highly advantageous outer port location, with direct connection to low cost, long life supply, combined with VLCC capability and fast loading rates, positions it as the one of the most competitive export facilities in the world. The EIEC relies on 925,000 barrels per day of long-term take-or-pay ship loading contracts and 15.3 million barrels of long-term storage contracts providing visibility into cash flow future. Its direct connection to the globally competitive Permian and Eagle Ford basins will ensure sustainable cash flow for many years to come.

Enbridge will also acquire a 20% interest in the 670 thousand barrels per day Cactus II pipeline, a 100% operating interest in the 300 thousand barrels per day Viola pipeline and a 100% operating interest in the pipeline. of 350 thousand barrels per day. barrel Taft Terminal. Together with EIEC, these pipeline and storage assets provide a fully integrated light crude export platform.

“This premier platform aligns very well with our long-standing shareholder value proposition; a strong business foundation that generates highly transparent and low risk cash flow, establishing a new platform for low capital intensive growth and attractive financial performance, while maintaining a strong balance sheet and funding flexibility. This investment is also a great example of how we are focusing on being a differentiated service provider for our customers by reducing emissions across our systems. In line with this goal, we plan to expand solar power capacity at the terminal site, which will ensure this is the most sustainable export facility in North America and support our goal of zero. net by 2050 at the enterprise level, ”said Monaco.

The assets acquired are expected to be immediately and strongly accretive to distributable cash flow per share and earnings per share. In addition, the continued generation of EBITDA supports the Company’s dividend growth prospects and growing base of its free cash flow, further strengthening its industry-leading financial flexibility and preserving its annual self-funded funding capacity of $ 5 billion to $ 6 billion. from 2022. The transaction will initially be funded from existing cash and the Company expects the 2022 debt / EBITDA ratio to be at the lower end of its target range.

This investment also provides Enbridge with additional organic growth potential supporting the Company’s growth prospects beyond 2023. The EIEC has authorized the expansion of existing storage capacity to 21 million barrels and export capacity to 1.9 million barrels per day, offering the opportunity to capitalize on the increase in volumes and the visibility of low capital intensive growth in the short term. In addition, Enbridge will hold a 50% interest in a St. James deepwater crude and refined product terminal development opportunity, which offers longer-term growth potential.

The EIEC was recently built to state-of-the-art environmental standards designed to minimize its carbon footprint. Enbridge expects to further reduce emissions from its facilities by applying up to 60 MW of solar power capacity, taking advantage of the more than 500 acres of available land included in the terminal. This investment in renewable energy is expected to far exceed the electricity needs of the IECEC, allowing excess production capacity to be outsourced to local industrial and refining facilities while generating a solid return. In the longer term, it is possible to develop additional low carbon energy infrastructure within the facility, including renewable fuels and a carbon capture terminal.

The transaction is expected to close in the fourth quarter of 2021, subject to regulatory approvals and customary closing conditions. Moda’s Ingleside management and key staff at the Moda Marine Terminal will remain in place after the transaction closes, ensuring the continuity of ongoing operations and development activities.

About Enbridge Inc.

Enbridge Inc. is a leading energy infrastructure company in North America. We safely and reliably provide the energy people need and want to improve their quality of life. Our core businesses include liquids pipelines, which transport approximately 25% of crude oil produced in North America; Gas Transmission and Midstream, which transports approximately 20% of the natural gas consumed in the United States; Gas Distribution and Storage, which serves approximately 3.8 million retail customers in Ontario and Quebec; and Renewable Power Generation, which generates approximately 1,766 MW of net renewable energy in North America and Europe.

Source and photo: Enbridge Inc.

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