Enable Midstream Plans Major Expansion of Crude Oil Gathering Business

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Enable Midstream Partners LP has signed agreements to significantly expand its crude oil midstream business in two of the most active crude plays in the United States.

In the Anadarko Basin, Enable has signed a definitive agreement to acquire Velocity Holdings LLC, an integrated crude oil and condensate gathering and transportation company in the SCOOP and Merge plays in Oklahoma, for $442 million, subject to certain post-closing adjustments.

The Merge is a relatively young oil and natural play that sits between the SCOOP and STACK regions in the eastern Anadarko Basin in central Oklahoma.

In the Williston Basin, Enable has entered into new contractual commitments for a substantial expansion of the company’s crude and water gathering systems driven by significant producer activity and a backlog of drilled but uncompleted wells from over 90,000 gross acres of dedication.

“Today’s announcements continue Enable’s strategy of extending our reach across the midstream value chain by significantly expanding our crude business,” said Enable Midstream president and CEO Rod Sailor in an Oct. 23 statement. “The Velocity acquisition builds on Enable’s market-leading Anadarko Basin midstream platform that now offers customers complete wellhead-to-market solutions for both natural gas and crude. The combination of the Velocity acquisition and the expansion of our Williston Basin assets increases the scale and contribution of our crude and water businesses, providing for fee-based growth as producers continue to target crude oil production.”

The Velocity acquisition builds on Enable’s existing natural gas gathering and processing infrastructure in the prolific SCOOP and Merge plays. The Velocity crude and condensate system is comprised of approximately 150 miles of pipeline capable of flowing approximately 225,000 barrels per day (bpd), along with more than 400,000 barrels of owned and leased storage and 26 truck bays capable of unloading more than 100,000 bpd.

Included in these assets is Velocity’s 60 percent interest in a 26-mile pipeline system joint venture with an unnamed third-party that owns and operates a refinery connected to the Velocity system. Velocity’s operations are backed by large area dedications and long-term, fee-based contracts with over 2 million acres dedicated from shippers, including acreage dedications from top SCOOP and Merge producers.

The Velocity acquisition will give Enable an integrated crude and natural gas midstream platform in the Anadarko Basin, enhancing Enable’s business development prospects, strengthening relationships with key current customers and providing the opportunity for operational synergies. Producers have dedicated additional rigs to the oil-rich SCOOP and Merge plays over the past year, and the move to pad drilling in these areas is expected to increase demand for crude oil gathering services. As the only integrated crude oil and condensate gathering and transportation system in the SCOOP and Merge plays, the Velocity system is poised for sustained growth from both new customers and the substantial drilling inventory of current customers on the system.

Enable received early termination of the waiting period under the Hart–Scott–Rodino Antitrust Improvements Act on Oct. 19 and expects to close the Velocity acquisition on or about Nov. 1, following the satisfaction of remaining pre-closing conditions.

In the Williston Basin, Enable plans to further expand its existing crude oil and water gathering systems to support volumes from over 90,000 gross acres dedicated to Enable in North Dakota’s Dunn and McKenzie counties under long-term, fee-based agreements. Subject to future drilling plans, Enable will add up to 72,000 bpd of crude oil gathering design capacity, increasing total Williston Basin crude gathering capacity to up to approximately 130,000 bpd. Enable expects to start gathering volumes associated with these system expansions in the first half of 2019, including volumes from a significant number of drilled but uncompleted wells.

 

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