Crestwood Equity Partners and Oasis Midstream Partners on Oct. 26 announced that they entered into a definitive merger agreement in which Crestwood will acquire Oasis Midstream in an equity and cash transaction valued at $1.8 billion, including debt.
The deal follows another big transaction in the midstream space last week, BCP Raptor Holdco/EagleClaw Midstream’s acquisition of Altus Midstream Co. from Blackstone, I Squared Capital and Apache for $9 billion.
The combination is a manifestation of needed midstream consolidation, especially of gathering and processing assets, Piper Sandler analyst Pearce Hammond said in a note.
“The industrial logic of the combination is very sensible given that OMP’s Bakken assets fit so well with CEQP’s assets in the basin,” he said.
The analyst estimates the deal values Oasis Midstream at $26.42 per unit, around 9% higher than yesterday’s closing price.
Crestwood plans to finance the acquisition with 33.8 million newly issued common units and $160 million in cash. The buyer estimates it can capture around $25 million in incremental annual cash flow over the next several years through asset integration as well as G&A savings.
At closing, Oasis Midstream will own about 35% of Crestwood’s outstanding common units, of which around 22% will be owned by Oasis Petroleum. Oasis Petroleum will receive the right to appoint two representatives to Crestwood’s board.
Baker Botts advised Crestwood led by corporate partners Josh Davidson and Jon Bobinger, senior associate Sarah J. Dodson and associates Garrett Hughey, Marshall Heins II, Michael Mazidi and Chelsea Johnson, all of Houston.
Houston partner Michael Bresson and senior associate Jared Meier worked the deal on tax, Dallas partner Luke Weedon and associate Josh Espinosa on finance and Houston partner Scott Looper and associate Megan Young on global projects. On employee benefits/executive compensation, the team included partner Gail Stewart, special counsel Krisa Benskin and associate Gabriela Alvarez, all of Houston.
Crestwood’s internal lawyer was associate general counsel Mike Post. Crestwood’s main business point person on the deal was Will Moore, executive vice president, corporate strategy.
Vinson & Elkins represented Oasis Midstream led by partners Dave Oelman and Benji Barron in Houston with assistance from associates David Lassetter, Matt Fiorillo, Libby Gerstner, John Frey and Ryan Bullard.
Also advising were partner Ryan Carney, counsel Debra Duncan and associates Curt Wimberly and Maddie Brown on tax; partner David D’Alessandro, counsel Dario Mendoza and associate Mary Daniel Morgan on executive compensation/benefits; partner Sean Becker and associate Peter Goetschel on labor/employment; partner Matt Dobbins and associates Austin Pierce and Simon Willis on environmental; and partner Suzanne Clevenger and senior associate Victoria Galvez Godfrey on energy regulatory.
Through a spokeswoman, Baker Botts said this is only the latest in a string of high-profile energy deals the firm has advised on recently, including ConocoPhillips on its $9.5 billion acquisition of Shell’s Delaware basin position, Cabot Oil & Gas on its $17 billion merger with Cimarex and CenterPoint on Energy Transfer’s $7.2 billion acquisition of Enable Midstream Partners as well as its $2.15 billion sale of its Arkansas and Oklahoma natural gas LDC businesses to Summit Utilities.
The firm also counseled the conflicts committee of Noble Midstream Partners on the $1.3 billion sale to Chevron Corp., NRG Energy on its $1.1 billion offering of sustainability-linked senior notes, the underwriters on Enbridge’s $1.5 billion financing (including the offering of a $1 billion sustainability-linked senior notes), Clearway Energy Operating on an offering of a $925 million “green bond,” Hunt Energy Network on the formation of a new energy storage venture and BP Exploration & Production in the sale of its fiber optic network to Tampnet.