Enbridge to expand U.S. oil export capacity with $3B Moda Midstream deal

By Simon Casey on 9/7/2021
Enbridge CEO Al Monaco
Enbridge CEO Al Monaco

(Bloomberg) --Enbridge Inc., the Canadian pipeline giant, agreed to acquire Moda Midstream Operating LLC for $3 billion to add U.S. Gulf Coast oil export capacity.

The company is buying Moda Midstream Operating LLC for $3 billion in cash from EnCap Flatrock Midstream, Enbridge said Tuesday in a statement.

Enbridge, which already handles about a quarter of all crude produced in North America, is betting on a strong outlook for exports of oil pumped from the Permian and Eagle Ford shale basins. The fracking revolution has not only revived U.S. oil production over the past decade, it has turned the country into one of the largest shippers of the commodity.

“Our strategy is driven by the important role that low cost, sustainable North America energy supply will play in meeting growing global demand,” Enbridge Chief Executive Officer Al Monaco said in the statement.

The deal includes Ingleside Energy Center, near Corpus Christi, Texas. Built in 2018, it’s North America’s largest crude export terminal, which loaded 25% of all U.S. Gulf Coast crude exports last year. Enbridge will also acquire a 20% stake the Cactus II Pipeline, which connects the Permian with the Gulf Coast, plus the Viola pipeline and the Taft Terminal.

Enbridge said the acquisition will be initially funded with current liquidity, and that the deal -- which is expected to close in the fourth quarter -- will immediately add to earnings. The company’s shares were little changed at $40 at 7:54 a.m. in pre-market trading in New York.

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