Enbridge Scoops Moda Midstream for $3 Billion
Canadian midstream giant adds key US oil export capacity via private-equity exit.
Enbridge has entered into a definitive purchase agreement with venture capital firm EnCap Flatrock Midstream to acquire Moda Midstream Operating for $3 billion in cash. The acquisition will significantly advance the company’s US Gulf Coast export strategy and connectivity to low-cost and long-lived reserves in the Permian and Eagle Ford basins. The transaction will be initially funded with existing liquidity.
Enbridge will acquire a 100% operating interest in the Ingleside Energy Center (to be renamed the Enbridge Ingleside Energy Center [EIEC]), located near Corpus Christi, Texas—North America’s largest crude export terminal, which loaded 25% of all US Gulf Coast crude exports in 2020. The terminal, built in 2018, comprises 15.6 million bbl of storage and 1.5 million B/D of export capacity.
“We’re very excited about acquiring North America's premium, very-large-crude-carrier (VLCC)-capable, crude export terminal," said Al Monaco, president and chief executive of Enbridge. "Over the last several years we've been building a strong position in the US Gulf Coast through both natural gas and crude infrastructure. With proximity to world-class Permian reserves, and with cost-effective and efficient export infrastructure, our new Enbridge Ingleside terminal will be critical to capitalizing on North America’s energy advantage.”
EIEC’s outer harbor location, with direct connection to supply combined with VLCC capability and rapid loading rates position it as one of the most competitive export facilities globally, according to Enbridge. EIEC is underpinned by 925,000 B/D of long-term take-or-pay vessel-loading contracts and 15.3 million bbl of long-term storage contracts providing visibility to future cash flows.
Enbridge will also acquire a 20% interest in the 670,000 B/D Cactus II Pipeline, a 100% operating interest in the 300,000 B/D Viola pipeline, and a 100% operating interest in the 350,000 B/D Taft terminal.
Enbridge expects the acquired assets to be immediately and strongly accretive to distributable cash flow per share and earnings per share.
EIEC permitted expansions of existing storage capacity to 21 million bbl and export capacity to 1.9 million B/D, provides Enbridge opportunity to capitalize on increasing volumes and visibility to near-term low-capital-intensity growth. In addition, Enbridge will hold a 50% interest in a brownfield St. James deepwater crude and refined products terminal development opportunity, which provides longer-term growth potential, according to the company.
Enbridge expects to further lower EIEC emissions through the application of up to 60 MW of solar power capabilities, leveraging over 500 acres of available land included within the terminal. The renewable investment is expected to well exceed EIEC’s power requirements, allowing excess generation capacity to be contracted to local industrial and refining facilities.
The transaction is expected to close in the fourth quarter of 2021, subject to customary regulatory approvals and closing conditions. Moda’s Ingleside management and key Moda marine terminal personnel will remain in place following closing of the transaction, ensuring continuity of operations and ongoing development activities. Moda’s founder, Javier del Olmo, will join Enbridge as a vice president.