Oklahoma headquartered Enable Midstream announced Wednesday that it has agreed to merge with Dallas-based Energy Transfer in a $7.2 billion all-equity deal. The deal marks a major move toward the kind of asset consolidation that has characterized the upstream and downstream O&G markets in the disruptive Covid era.
Latham and Watkins advised Energy Transfer and Vinson & Elkins counseled Enable with teams based mostly in Texas. Baker Botts, Gibson Dunn and Jones Day also had clients in the deal.
Under terms of the agreement Enable unitholders will receive 0.8595 units of Energy Transfer for each of their common units. Enable Series A preferred units will be exchanged for Energy Transfer Series G preferred units at a rate of O.0265 for each. The terms also include a payment of $10 million in cash to Enable’s General Partner.
At closing, former Enable unitholders will hold about 12% of Energy Transfer. About 79.2% of Enable is owned by OGE Energy and CenterPoint Energy.
Latham & Watkins advised Energy Transfer in the transaction with a 24-lawyer team led by Houston partners Bill Finnegan and Kevin Richardson, with associates Thomas Verity, Daniel Harrist, Madeleine Neet, Luke Strother, Austin Johnson and Michael Basist.
Advice was also provided on tax matters by Houston partners Tim Fenn and Bryant Lee and Los Angeles partner Larry Stein, with associates Michael Rowe and Dominick Constantino; on finance matters by Houston partners Craig Kornreich and Pamela Kellet, with associate Matthew Snodgrass; on antitrust matters with Washington, D.C. partner Jason Cruise and Washington, D.C. counsel Peter Todaro; on environmental matters by Houston partner Joel Mack and Los Angeles counsel Joshua Marnitz; on regulatory matters by Washington, D.C. partner Eugene Elrod, with associate Christopher Randall; and on benefits and compensation matters by Washington, D.C. partner Adam Kestenbaum, with associate Courtney Thomson.
Citi and RBC Capital Markets were financial advisors to Energy Transfer.
The 34-lawyer V&E team advising Enable was led by partners David Oelman, Steve Gill and Scott Rubinsky with assistance from associates Mariam Boxwala, Farah Chranya, Danny Wicoff, Matt Fiorillo and Natalie Stanley.
Also advising were partners Ryan Carney and Debra Duncan and associate Andrew Mandelbaum (tax); partner Shane Tucker, senior associate Heather Johnson and associate Matt Green (executive compensation/benefits); partner Sean Becker and associate Peter Goetschel (labor/employment); partner Hill Wellford, counsel David Smith and senior associate Ryan Will (antitrust); partner Darin Schultz, senior associate Alex Cross and associate Weston Kowert (finance); counsel Dan Spelkin (corporate); partner Jay Seegers, counsel Andrew Beach and senior associate Michael Malenfant (energy regulatory); partner Matthew Dobbins, counsel Brandon Tuck and associates Simon Willis and Austin Pierce (environmental); partner Palmina Fava, senior associate Carla Jordan-Detamore and associate Laura Muse (FCPA); counsel Elizabeth McIntyre (government contracts); partner Devika Kornbacher and senior associate Sean Hill (technology transactions/IP); and partner Julia Sanabria and senior associate Naheem Harris (real estate).
Intrepid Partners acted as financial advisor and Richards, Layton & Finger as legal advisor to Enable’s conflicts committee.
Baker Botts represented CenterPoint Energy, one of the two main shareholders in Enable Midstream. Timothy Taylor, Josh Davidson, Clint Rancher, Laura Katherine Mann, Josh Gonzales and Shumaila Dhuka. Richard Husseini, Mike Bresson and Jared Meier advised on tax matters and Tom Fina on antitrust issues.
In addition, Jones Day said it represented OGE Energy Corp., owners of a 25.5% limited partner interest and a 50% general partner interest in Enable. Jones Day lawyers Jeff Schlegel and Lyle Ganske, both of Houston, led in that representation.
Aside from the benefits of the asset consolidation, Energy Transfer said the all equity basis of the transaction will have an immediate, positive effect on its deleveraging efforts by both adding cash flow from fixed-fee contracts and the overall impact on its current credit metrics.
The Enable assets include 14,000 miles of natural gas, crude oil, condensate and produced water gathering pipelines, primarily in Oklahoma, Texas, Arkansas and Louisiana. The company holds a significant presence in the Anadarko, Arklatex and Arkoma basins.
Note: This post was updated to include the involvement of Jones Day in the deal.