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Easton Energy Enters Agreement to Sell its Gulf Coast Liquids Pipeline System
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Easton Energy, a Houston-based midstream company, has agreed to sell its Gulf Coast Liquids Pipeline System to ONEOK, Inc. for $280 million. The system consists of 450 miles of NGL and hydrocarbon pipelines in Texas and Louisiana. Easton will retain its NGL and olefins storage business in Markham, Texas. The sale will allow Easton to focus on its storage business, with a transaction expected to close in mid-2024.
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ONEOK, Inc.'s acquisition of Easton Energy's Gulf Coast Liquids Pipeline System for $280 million is a strategic expansion of their midstream service offerings in a key energy corridor. This deal is expected to enhance ONEOK's integrated network and could potentially provide cost synergies by integrating the acquired pipelines with its existing infrastructure. The transaction, to be completed in mid-2024, suggests a confidence in the long-term value of the midstream sector amidst the current energy environment. For Easton, divesting its pipeline system allows it to concentrate on its natural gas liquids (NGL) and olefins storage business, creating opportunities for specialization and perhaps improved operational efficiencies. Investors in ONEOK may view this as a positive move, strengthening its position in the industry, while Easton's investors might anticipate a more focused business strategy moving forward.
The divestiture of Easton's pipeline system is in line with industry trends where companies streamline operations to focus on core competencies. The Gulf Coast region is pivotal for NGL and hydrocarbon transportation and the transaction will likely increase ONEOK's market presence in this strategic area. The infrastructure's strategic location between Mont Belvieu and Corpus Christi is significant due to their roles as key petrochemical markets. For stakeholders in the energy sector, especially midstream, the interplay of storage and transportation is an essential aspect to understand, as it impacts the delivery of commodities to market. The proximity to key markets suggests potential for Easton to leverage its remaining storage business for strategic partnerships and customer diversification, which could be a point of interest for investors looking into niche market plays within the broader energy sector.
The transaction's adherence to the Hart-Scott-Rodino Antitrust Improvements Act indicates due diligence concerning regulatory compliance, a critical component in such deals to prevent anti-competitive practices. The waiting period and the eventual approval by regulatory bodies will be a determining factor in the finalization of the deal. An investor's perspective on regulatory compliance is crucial: it can mitigate risks associated with antitrust issues which, if unaddressed, could result in delays or even the nullification of the deal. It's important to monitor this aspect closely as it progresses towards closure, as any hurdles in this area could have material repercussions on the expected benefits of the acquisition.
HOUSTON--(BUSINESS WIRE)--
Easton Energy (Easton), a Houston-based midstream company, announced today that it has entered into an agreement to sell its Gulf Coast Liquids Pipeline System to ONEOK, Inc. (NYSE: OKE) for approximately $280 million, subject to customary price adjustments. Easton will retain, and continue operating, its natural gas liquids (NGL) and olefins storage business located in Markham, Texas.
The system included in the transaction is comprised of approximately 450 miles of NGL and hydrocarbon pipelines located throughout the Texas and Louisiana Gulf Coast midstream corridors for NGL and olefin service.
“These pipelines are a critical piece of the U.S. Gulf Coast NGL and hydrocarbon value chain,” said G.R. “Jerry” Cardillo, Easton’s Chief Executive Officer. “This transaction recognizes value for our customers, shareholders, and our business partners. We will now pivot our focus to our remaining business, our NGL and olefins storage business.”
Easton is a portfolio company of Cresta Fund Management (Cresta), a Dallas-based private equity fund that manages over $1.6 billion of capital.
“This transaction confirms the potential Cresta saw in these pipelines when we acquired them in 2018,” said Chris Rozzell, Cresta’s Managing Partner. “We are enthusiastic about Easton’s sharpened focus on its storage business and are excited about its ability to provide services to a variety of different NGL customers.”
Easton’s salt dome storage infrastructure is located between key NGL and petrochemical markets in Mont Belvieu and Corpus Christi, Texas. This infrastructure includes brine handling facilities and multiple salt dome wells with approximately 40 million barrels of NGL and olefins storage capacity.
Easton expects to close the transaction mid-year 2024. Closing is subject to customary conditions including termination or expiration of the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act.
About Easton Energy
Easton Energy LLC is a Houston-based midstream company focused on developing infrastructure assets that support the transportation, storage, and processing of natural gas liquids (NGL), refined products, and petrochemicals. Easton’s primary assets include liquid hydrocarbon salt cavern storage facilities at Markham, Texas, and approximately 455 miles of product distribution pipelines that connect key product markets along the Texas and Louisiana Gulf Coast. For more information, please visit eastonenergy.com.
About Cresta Fund Management
Cresta Fund Management (Cresta) is a Dallas-based private equity firm providing growth equity for sustainable and conventional energy infrastructure solutions for the industrial, logistics and agricultural sectors. With approximately $1.6 billion of assets under management, Cresta is led by a strong, operations-focused team with decades of experience in the energy and infrastructure industries. For more information, please visit crestafunds.com.
