EnLink Midstream Partners LP and EnLink Midstream LLC agreed to a pair of asset divestitures totaling $275 million in an effort to shore up their balance sheets and fund an expansion project to reinforce the companies' STACK play position in Oklahoma.
EnLink Midstream agreed to divest its 31% stake in Howard Midstream Energy Partners LLC for about $190 million to Alberta Investment Management Corp., with the deal set to close in the first quarter of 2017. EnLink Midstream also closed an agreement to sell its 140-mile North Texas natural gas pipeline in the Barnett Shale to Atmos Energy Corp. on Dec. 20, according to a news release by the EnLink companies.
The proceeds from these noncore divestitures represent about 16 times the assets' projected 2017 adjusted EBITDA contributions of $17 million to EnLink, the release said.
Along with planned at-the-market equity issuances, the proceeds from these transactions are expected to fund most of EnLink's equity needs for its 2017 CapEx program, such as the first installment payment of $250 million related to the January 2016 acquisitions of certain subsidiaries of Tall Oak Midstream LLC and an approximately $100 million investment to construct the new 200-MMcf/d Chisholm III plant, expected to be in service by the end of 2017.
Once the Chisholm III expansion is completed, EnLink's central Oklahoma processing capacity will total about 1 Bcf/d, making it one of the largest gas processors in the STACK.
"These non-core divestitures are an extension of our strategy to strengthen our investment-grade balance sheet, consolidate around our core, and provide additional flexibility to strategically reinvest capital in key growth projects," said Barry Davis, EnLink chairman and CEO. "The Chisholm III expansion project solidifies EnLink's presence as one of the top midstream providers in the STACK, an area that continues to outperform, and underscores our strategy of positioning ourselves in the top regions with extraordinary growth potential."