Crestwood Equity Partners LP announced that they will acquire Oasis Midstream Partners in a $1.8 Billion Transaction.
Some highlights include:
- Combination creates a leading midstream service provider in the Williston Basin with a pro forma enterprise value of approximately $7.0B
- Transaction is an at-market deal based on closing prices for Oasis Midstream and Crestwood as of October 25, 2021
- Transaction consideration includes 33.8MM newly issued Crestwood common units and $160 million in cash
Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood, commented, “I am very excited to announce the strategic combination with Oasis Midstream, which has strong industrial logic and perfectly aligns with our stated strategy of consolidating high quality midstream assets in our core operating areas. This transaction enhances our competitive position in the Williston and Delaware Basins, enables Crestwood to capture substantial operational, commercial, and capacity synergies as we integrate the Oasis Midstream assets into our existing operations, and substantially expands the long-term contract acreage and inventory dedications of our gathering and processing portfolio. Importantly, we are completing this transaction during a period when macro oil and gas fundamentals are exceptionally supportive of upstream development and there is increasing demand for midstream infrastructure and services.”
Mr. Phillips continued, “Additionally, this transaction is expected to be accretive to Crestwood’s distributable cash flow per unit in 2022, strengthens our financial position by increasing 2021E pro forma Adjusted EBITDA and positive free cash flow by approximately 40% and maintains our strong balance sheet with pro-forma leverage of approximately 3.5x after the merger is completed. Given the confidence we have in the quality of the Oasis Midstream assets, expectations for continued Bakken development by Oasis Petroleum and our experience in efficiently integrating assets, Crestwood plans to accelerate the return of capital to our common unitholders through a 5% increase in the distribution once the transaction is closed. Through this transaction, we are excited to expand our relationship with the team at Oasis Petroleum and will have a shared vision for how our teams can work together to execute our Williston Basin strategies. We look forward to advancing those strategies with them as an important customer and equity partner going forward.”
Crestwood believes this transaction makes significant industrial logic, immediately enhancing Crestwood’s financial and operating scale:
- Highly complementary footprints in the Williston Basin increases Crestwood’s processing capacity to 430 MMcf/d with more than 100 MMcf/d available creating opportunities to optimize the assets and attract third party volumes
- This transaction increases Crestwood’s pro forma 2021E Adjusted EBITDA and free cash flow by approximately 40% to greater than $820MM
- Crestwood estimates it can capture more than $45MM in synergies based on $20MM in annual commercial synergies and $25MM in identified annual cost synergies
- Largely equity financed transaction drives YE 2022 leverage ratio below 3.5x, positioning Crestwood to increase its distribution by approximately 5% at close
Danny Brown, Chief Executive Officer of Oasis Petroleum Inc. and Chairman of Oasis Midstream, commented, “The combination of Crestwood and Oasis Midstream creates a midstream leader well positioned with size, scale and a diversified customer base. Crestwood’s experienced team brings a track record of operational excellence to handle a large portion of our company’s hydrocarbons and produced water in the Williston basin. Oasis Midstream unitholders, including Oasis Petroleum, are receiving compelling value in this transaction and will benefit from an ownership position in a larger combined company that will have a strong balance sheet and pay attractive distributions.”
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