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April 7, 2022

Midcoast Energy considers East Texas pipeline assets divestment

The potential deal is expected to earn as much as $2bn for the midstream company.

Midcoast Energy, a US-based a natural gas and natural gas liquids (NGL) midstream business, is exploring the sale of its pipeline assets in the East Texas part of the Haynesville Shale, reported Reuters, citing people familiar with the matter.

The potential sale is expected to earn as much as $2bn, including debt, for Midcoast Energy, which is owned by private equity firm ArcLight Capital Partners.

According to the sources, Midcoast is working with an investment bank on the proposed sale process.

The assets being considered for sale are in the East Texas portion of the Haynesville formation that also stretches into Louisiana.

There is no certainty on a sale transaction by Midcoast, the sources cautioned.

Midcoast Energy operates 3,625 miles of gas and NGL pipeline network, and six processing plants, with a capacity of approximately 700 million cubic feet per day. The company also owns seven treating plants, with a capacity of nearly 1.1 billion cubic feet per day.

The firm is engaged in transporting and marketing NGL, natural gas, condensate, crude oil, and related liquids products, through its logistics and marketing segment.

Its gathering and processing platforms operate in Anadarko and East Texas. The company also owns a stake in the Texas Express Pipeline.

ArcLight acquired Midcoast Energy from pipeline operator Enbridge in 2018, for $1.1bn.

Last year, a fund controlled by ArcLight Capital Partners acquired a 25% stake in the Natural Gas Pipeline Company of America (NGPL) from pipeline operator Kinder Morgan (KMI), and Brookfield Infrastructure Partners, in a deal worth $830m.

Said to be the largest transporter of natural gas into the Chicago-area market, NGPL comprises nearly 14,645km of pipeline.

The interstate pipeline system procures gas from the Texas Permian basin and the Gulf of Mexico.

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