EnLink Midstream LLC (NYSE: ENLC) dropped down Utica and Marcellus assets to its MLP, EnLink Midstream Partners LP (NYSE: ENLK).
ENLK announced Oct. 22 that it acquired equity interests in E2 Appalachian Compression LLC and E2 Energy Services LLC from ENLC for about $193 million, including $163 million cash and about 1 million ENLK units.
The transaction marks the first dropdown from ENLC to ENLK as part of the Dallas company's strategic growth strategy.
EnLink Midstream’s strategy in the Utica and Marcellus shale plays is primarily focused on stabilizing and transporting condensate via pipeline, rail, barge and trucking operations. The addition of the E2 assets further builds upon the partnership’s existing platform in the region, where EnLink Midstream expects to have invested roughly $700 million by the end of 2015, including the drop down of E2.
E2’s assets include five condensate stabilization and natural gas compression stations with combined capacities of 19,000 barrels per day of condensate stabilization and 580 million cubic feet per day of gas compression.
Three of the five E2 stations are currently operational, and the other two are expected to enter service in the first half of 2015. Once all of the assets are operational, they are expected to generate adjusted EBITDA of about $20 million to $25 million per year.
All of the assets are supported by a long-term, fee-based contract with Antero Resources Corp. (NYSE: AR).
In March, Devon Energy Corp. (NYSE: DVN) combined its U.S. midstream assets with Crosstex Energy LP to create EnLink Midstream Partners LP, the MLP, and EnLink Midstream LLC, the general partner.
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