Enbridge, MPLX to form JV to connect Permian Basin gas supply to USGC demand

Enbridge (ENB) announced that it has entered into a definitive agreement with WhiteWater/I Squared Capital and MPLX (MPLX) to form a joint-venture that will develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing LNG and U.S. Gulf Coast, or USGC, demand. Approximately 98% of capacity is contracted under long-term, take-or-pay contracts with an average contract length greater than 10 years. Approximately 90% of counterparties are investment grade and include operators in the Permian Basin. Upon closing of the transaction, Enbridge will contribute its wholly-owned Rio Bravo pipeline project and $350M in cash to the joint venture, and will fund the first $150MM of the post-closing capex to complete the Rio Bravo pipeline project. Enbridge will receive a 19% equity interest in the joint venture and retain a 25% economic interest in the Rio Bravo pipeline project. Enbridge will be contributing its Rio Bravo pipeline project, which will extend the joint venture’s current infrastructure to serve LNG and other customers on the USGC. Enbridge’s share of the post-closing capex to complete the Rio Bravo pipeline project will be 100% of the first $150M and, thereafter, proportionate to its aggregate economic interest in that project. This transaction is expected to unlock future growth opportunities for Enbridge to connect sustainable natural gas production to export markets as part of its USGC strategy. Closing is expected in the second quarter of 2024, subject to receipt of required regulatory approvals and satisfaction of other customary closing conditions.