OGE Energy Weighs Enable Midstream Sale Along With CenterPoint
(Bloomberg) -- OGE Energy Corp. has joined CenterPoint Energy Inc. in considering a sale of its stake in Enable Midstream Partners LP, putting the whole oil and gas pipeline company on the block, according to people familiar with the matter
The power companies are working with advisers, said the people, who asked to not be identified because the matter isn’t public. While CenterPoint has openly weighed an exit of Enable for years, OGE Energy is now aligned with that strategy, the people said. No final decision has been made and they could opt to hold on to Enable, they said.
Together the companies own all of Enable’s general partner while CenterPoint owns 53.7% of its common units and OGE Energy owns 25.5% of its common units, according to its third-quarter investor presentation. The rest of its common units are held by public investors.
Enable rose 1.3% to $4.61 at 10:54 a.m. Tuesday in New York trading, giving the company a market value of about $2.1 billion.
A representative for OGE declined to comment. Representatives for Enable and CenterPoint didn’t respond to requests for comment.
Pipeline companies structured as master limited partnerships such as Enable have fallen out of favor with investors because of depressed commodity prices and a weakening of the tax advantages they have traditionally enjoyed. That’s made it difficult for them to fund payouts to unit holders while continuing to invest in their operations.
The Alerian Midstream Energy Index has fallen about 35% in the past year while Enable has declined about 58%.
CenterPoint and OGE Energy formed Enable in 2013 to house their energy infrastructure, which today includes 15 processing plants and 14,000 miles of gathering pipelines, according to its investor presentation.
CenterPoint formed a committee in May to conduct a broad review of its business strategy as part of a deal with the activist investor Elliott Management Corp. That committee is due complete that review this month.
The company is reviewing options for its stake in Enable as it pushes to become more of a pure-play utility, CenterPoint Chief Executive Officer David Lasar said in an interview in July. It began trying to sell its stake in Enable as early as 2016.
For its part, OGE Energy’s goal will always be to maximize the value of Enable for the long-term benefit of OGE Energy shareholders, Chief Executive Officer Sean Trauschke said during an earnings call in August. He said he wouldn’t speculate on strategic alternatives for the company.
Pipeline and processing operations have been attractive to private equity and infrastructure funds. Buckeye Partners LP was acquired by IFM Investors in 2019 and a Blackstone Group Inc.-led group bought Tallgrass Energy LP this year.
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