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Crestwood Equity to spice up U.S. shale footprint with $1.8 bln deal

Oct 26 (Reuters) – Oil and fuel pipeline operator Crestwood Equity Partners LP (CEQP.N) will purchase Oasis Petroleum Inc’s (OAS.O) midstream unit (OMP.O) in a $1.8 billion deal to increase its footprint in U.S. shale basins.

The cash-and-stock deal comes as oil and fuel costs have touched multi-year highs, boosting shareholders’ confidence within the sector and inspiring mergers.

“As the commodity price outlook remains favorable for an acceleration of activity across the basin, this expanded footprint positions Crestwood to more aggressively pursue third party volumes,” the corporate stated in its assertion, referring to the Williston basin in North Dakota.

Last week, Altus Midstream Co introduced a merge with BCP Raptor, a holding firm for pipeline property within the Permian Basin, with the mixed entity to be valued at $9 billion, inclusive of debt.

Crestwood estimates it could seize over $20 million in incremental annual money circulation over the following a number of years from the Oasis deal and recognized about $25 million in annual price financial savings shortly after the transaction closes in 2022.

Crestwood additionally stated on Tuesday it expects to extend its distribution to $2.62 per unit yearly, an about 5% improve year-over-year, after the deal closes.

Oasis Petroleum will obtain $150 million in money and an combination of 21 million items in alternate for 33.8 million items held in its midstream firm. It may even obtain a $10 million money cost for its possession of the General Partner curiosity of Oasis Midstream.

Shareholders of Oasis Midstream, which had an excellent debt of about $660 million as of Sept. 30, will obtain an combination of 12.9 million Crestwood items in alternate for 14.8 million shares held.

The enterprise worth for the mixed corporations can be about $7 billion.

Unitholders of Oasis Midstream will personal about 35% of Crestwood’s items, of which, about 22% can be owned by Oasis Petroleum.

Reporting by Arathy S Nair in Bengaluru; Editing by Shinjini Ganguli

Drill pipe is seen below a drilling rig on a lease owned by Oasis Petroleum in the Permian Basin near Wink, Texas U.S. August 22, 2018.  Picture taken August 22, 2018. REUTERS/Nick Oxford