Crestwood Bets on U.S. Shale Growth With Oasis Pipeline Deal
(Bloomberg) -- Crestwood Equity Partners LP agreed to acquire Oasis Midstream Partners LP for about $1 billion in cash and stock, adding pipelines and related assets in a bet on growth in the Williston and Delaware shale basins in the U.S.
The deal will allow Crestwood to realize about $45 million in annual cost savings, the companies said Tuesday in a statement. Oasis Petroleum Inc. agreed to sell its majority stake in Oasis Midstream as part of the transaction and will get the right to appoint two directors to Crestwood’s board.
Crestwood is bulking up just as oil and natural gas trade near multiyear highs. While that’s left drillers flush with cash, many publicly traded U.S. shale operators have pledged to keep production flat and prioritize returns to shareholders. But privately operated rivals have been adding more drill rigs, and the temptation remains for U.S. shale producers to tap additional wells and lock in current price levels.
“We are completing this transaction during a period when macro oil and gas fundamentals are exceptionally supportive of upstream development and there is increasing demand for midstream infrastructure and services,” Crestwood Chief Executive Officer Robert G. Phillips said in the statement.
The company added that conditions are “favorable for an acceleration of activity” across the Williston basin, which straddles North Dakota, South Dakota and Montana. Crestwood already has operations in the Delaware, which forms part of the Permian Basin in Texas and New Mexico.
Units of Oasis Midstream climbed 4.9% to $25.45 at 9:36 a.m. in premarket trading in New York, while Crestwood dropped 2.6% to $29.53. The deal is expected to close in the first quarter.
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