EnLink to acquire US processor Tall Oak Midstream for $1.55 billion
The EnLink Midstream companies have signed definitive agreements to acquire subsidiaries of Tall Oak Midstream for $1.55 billion, subject to certain adjustments, officials announced on Monday.
The purchase price will be paid in installments, with the first installment of $1.05 billion paid at closing and the final installment of $500 million paid no later than the first anniversary of the closing date with the option to defer $250 million of the final installment up to 24 months following the closing date.
The Tall Oak assets serve gathering and processing needs in the growing STACK and Central Northern Oklahoma Woodford (CNOW) plays in Oklahoma and are supported by long-term, fixed-fee contracts with acreage dedications that have a remaining weighted-average term of approximately 15 years.
A subsidiary of Devon Energy also announced that it signed a definitive agreement to acquire Felix Energy for $1.9 billion, subject to certain adjustments. The Felix acreage is dedicated to the Tall Oak system, making it the largest customer of this system.
The acquisition of Felix will enhance Devon’s size and scale in the STACK play by adding approximately 80,000 net surface acres immediately north and northeast of its legacy STACK/Cana position. The deal highlights strong sponsorship and alignment between EnLink and Devon, according to company officials.
“This unique and highly attractive transaction underscores the strength and synergies of EnLink’s partnership with Devon, demonstrating the value creation our relationship brings,” said Barry E. Davis, EnLink CEO. “The acquisition is consistent with our growth strategy and will provide EnLink with an expanded position in one of the best plays in the nation, the liquids-rich STACK play, as well as expand our Oklahoma footprint and diversify our customer base. These assets represent attractive gathering and processing opportunities that are anchored by long-term, fee-based contracts that provide stable cash flows.”
The transaction, which is expected to be completed in the first quarter of 2016, is subject to the satisfaction of customary closing conditions, including applicable regulatory approvals, as well as the completion of Devon’s acquisition of Felix, which is expected to occur concurrently with the Tall Oak closing.
“We are proud of the business we’ve built at Tall Oak, and we’re grateful to see its success continue in the hands of a company like EnLink,” said Ryan D. Lewellyn, Tall Oak’s CEO. “We chose EnLink because it has a proven track record and will take great care of our customers."
Jefferies LLC is acting as EnLink’s primary financial and technical advisor on the Tall Oak transaction. Morgan Stanley & Co. LLC is also acting as financial advisor and was the primary advisor for the financing transactions.
More details on the specific Tall Oak assets can be found in the official news release.
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