Crestwood Makes $1.19B Worth Of Asset Transactions
Crestwood Equity Partners has signed agreements to acquire Sendero Midstream Partners, for $600 million, First Reserve’s 50 percent equity interest in Crestwood Permian Basin Holdings for $320 million in Crestwood common units, plus the assumption of asset level debt, and divest its legacy, non-core Barnett Shale assets to EnLink Midstream for $275 million. The transactions are expected to close early in the third quarter of 2022, subject to customary regulatory approvals.
“I am thrilled to announce this series of strategic transactions that greatly enhance the Crestwood franchise by creating immediate scale and additional runway in the Delaware Basin, high-grading our cash flow mix through the rationalization of non-core assets, and successfully maintaining our conservative balance sheet and financial flexibility,” commented Robert G. Phillips, Founder, Chairman, and Chief Executive Officer of Crestwood.
“The acquisition of Sendero Midstream is highly complementary to our existing Willow Lake assets, provides excess processing and compression capacity for current and future customer development activity, and solidifies Crestwood’s footprint in the leading North American shale play. Furthermore, the consolidation of First Reserve’s equity interest in CPJV simplifies our corporate structure and drives enhanced financial, commercial, and operational flexibility. Both transactions are highly synergistic and will drive meaningful accretion to our distributable cash flow for many years to come,” he said.
Sendero Midstream assets are located entirely in Eddy County, New Mexico, one of the most active regions of the Delaware Basin as evidenced by approximately 25 percent of total basin rigs focused on the county. The acquisition adds more than 75,000 dedicated acres with over 1,200 tier 1 drilling locations, long-term fixed-fee contracts with commodity price upside, and a diverse and active set of private and public producer customers.
Following the close of the transactions, Crestwood will implement its sustainability best practices as it assumes operatorship of the Sendero Midstream assets. This includes incorporating the acquired assets into its carbon management plan with a focus on emissions reductions and increased methane emissions monitoring.
Under the terms of the First Reserve agreement, Crestwood will acquire the remaining 50 percent equity interest in CPJV for $320 million. In connection with the acquisition, Crestwood will issue to First Reserve approximately 11.3 million common units, which represents a total transaction value of $320 million.
The divestiture of Crestwood’s legacy, non-core Barnett Shale assets to EnLink Midstream for $275 million, includes the Alliance System, the Lake Arlington System, and the Cowtown System, representing a full exit from the Barnett Shale. Crestwood will utilize the cash proceeds from the sale to fund the cash consideration for the Sendero Midstream acquisition.
These transactions have been unanimously approved by the Board of Directors of Crestwood’s general partners, Sendero Midstream and First Reserve. The transactions are expected to close early in the third quarter of 2022, subject to customary regulatory approvals.
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