Major acquisition and expansion announced by OKC’s Enable Midstream Partners

A $442 million acquisition of Velocity Holdings, LLC in the Anadarko Basin has been announced by Oklahoma City-based Enable Midstream Partners, LP.  At the same time, the company is expanding operations in North Dakota.

It’s a major expansion of crude oil midstream business for Enable in the SCOOP and Merge plays. Velocity Holding, based in Coppell, Texas filed for Chapter 11 bankruptcy last year listing liabilities between $100 million and $500 million while assets totaled between $1 million and $10 million.

Enable already has more than 13,000 miles of pipeline across the U.S. but this acquisition includes 150 miles of pipeline capable of flowing 225,000 barrels a day along with more than 400,000 barrels of owned and leased storage and 26 truck bays capable of unloading more than 100,000 barrels a day. Velocity also had a 60% interest in a 26-mile pipeline system joint venture with a third party that owns and operates a refinery connected to the Velocity system.

The Velocity operations also are backed by long-term, fee-based contracts with more than 2 million acres dedicated from shippers.

“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. “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.”

Taken together, Enable expects the two crude business expansions to generate a 2019 total capital invested to Adjusted EBITDA multiple of approximately 13 times, working down to below a 10-times multiple by 2020. These expansions are expected to be accretive to distributable cash flow per unit starting in 2019. Enable does not expect to raise common equity to finance the Velocity acquisition.

The Velocity acquisition builds on Enable’s market-leading natural gas gathering and processing infrastructure position in the prolific SCOOP and Merge plays that have attracted substantial producer activity with some of the best well economics in the country.

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.

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.