Enable Midstream scoops up plays’ crude oil handler

Enable Midstream Partners is expanding in Oklahoma's SCOOP and Merge plays to transport crude oil and condensates, the Oklahoma Citybased midstream company said Tuesday.

The company issued a news release after markets closed Tuesday, stating executives have signed a definitive agreement to buy Tulsa-based Velocity Holdings LLC, a company owned by Velocity Midstream Partners, for $442 million.

Velocity Holdings owns an integrated crude oil and condensate gathering business active in those plays.

It also announced Tuesday it has entered into new contracts with producers in North Dakota's Williston Basin that will expand the company's crude and produced water gathering systems it already operates there.

Officials said the Velocity acquisition will build on Enable’s existing natural gas gathering and processing systems in the SCOOP and Merge plays.

The Velocity crude and condensate system consists of about 150 miles of pipeline capable of flowing about 225,000 barrels per day. The system also includes more than 400,000 barrels of owned and leased storage and 26 truck bays capable of unloading more than 100,000 barrels per day.

Enable stated Velocity’s ongoing operations are backed by large area dedications and long-term, fee-based contracts with shippers that include top SCOOP and Merge producers.

The Velocity system is poised for sustained growth, both from new customers and current customers who have substantial drilling inventories, they said.

The purchase agreement also will allow Enable to assume Velocity’s 60 percent interest in a 26-mile pipeline system

joint venture Velocity entered into with CVR Refining in September 2016.

The project will give CVR direct pipeline access for its Wynnewood refinery to oil produced from SCOOP wells, and provides producers a place where they can ship both heavier crudes produced from the Springer and Woodford formations with lighter ones produced from others.

Corporate officials stated Velocity's acquisition will enhance Enable’s ongoing business development

opportunities in the Merge and SCOOP by strengthening its relationships with key customers and providing future opportunities for operational synergies.

The deal is expected to close on Nov. 1, and Enable stated it isn't issuing new stock to pay for the purchase.

“Today’s announcements continue Enable’s strategy of extending our reach across the midstream value chain by significantly expanding our crude business,” said Rod Sailor, Enable’s president and chief executive officer.

As for its plans in North Dakota, Enable stated it plans to add up to 72,000

barrels per day in capacity based on long-term commitments to bring the total capacity of its oil and produced water gathering systems in the Williston Basin to about 130,000 barrels per day.

Officials stated Enable expects to begin gathering increased volumes through the expansions during the first half of 2019.

"The combination of the Velocity acquisition and the expansion of our Williston Basin assets increases the scale and contribution of our crude and water businesses, providing for fee-based growth as producers continue to target crude oil production,” Sailor said.