Enbridge buys Tallgrass crude pipeline network for $2.55 billion, deepening Rockies-to-Cushing reach
A $2.55 billion all-cash agreement puts Enbridge (ENB) in control of Tallgrass Energy's crude transportation network, adding the 1,050-mile Pony Express Pipeline and roughly 8.4 million barrels of storage that bridge…
Key takeaways
- Enbridge agreed to buy Tallgrass Energy's crude transportation network for $2.55 billion in an all-cash deal, gaining the 1,050-mile Pony Express Pipeline and about 8.4 million barrels of storage.
- The purchase gives Enbridge a 75% interest in Pony Express (roughly 460,000 bpd capacity linking Rockies-area production to Cushing, Oklahoma), a 51% stake in the Powder River Gateway system, and a nine-terminal storage network.
- Enbridge expects the price to represent a forward enterprise value-to-EBITDA multiple of 10 to 11 times and anticipates the deal will increase distributable cash flow per share in its first full year of ownership.
- The deal includes the roughly $300 million PXP2 expansion project, expected to enter service in late 2027 and lift Pony Express capacity to about 515,000 bpd.
- U.S. antitrust clearance is the next required step, with the deal expected to close later in 2026.
A $2.55 billion all-cash agreement puts Enbridge (ENB) in control of Tallgrass Energy's crude transportation network, adding the 1,050-mile Pony Express Pipeline and roughly 8.4 million barrels of storage that bridge Rockies production to the Cushing, Oklahoma hub. Regulatory clearance, including U.S. antitrust review, is the next gate before the deal closes later in 2026.
What the assets bring
The transaction gives Enbridge a 75% interest in Pony Express, a system with capacity of roughly 460,000 barrels per day that links Denver-Julesburg, Bakken and Powder River Basin production directly to Cushing and connects to around 500,000 bpd of nearby refining capacity. Alongside it sits a 51% stake in the Powder River Gateway system, two pipelines with combined capacity of about 240,000 bpd, and the nine-terminal storage network.
Enbridge said it expects the purchase price to represent a forward enterprise value-to-EBITDA multiple of between 10 and 11 times.
The deal also includes the PXP2 expansion project, a roughly $300 million investment backed by take-or-pay contracts that is expected to lift Pony Express capacity to approximately 515,000 bpd. Enbridge expects PXP2 to enter service in late 2027 and plans to fold it into a secured growth backlog currently valued at $41 billion.
The setup from here
Pony Express is heavily contracted through the end of the decade, largely with investment-grade counterparties. That contracted profile fits squarely within Enbridge's stated view that inland U.S. crude will remain a material source of global supply for decades. The acquisition complements the company's existing Express-Platte system, deepening its position along the supply corridors running from the Bakken, Powder River Basin and Denver-Julesburg Basin into Cushing.
This is Enbridge's second U.S. crude infrastructure move in quick succession. The company agreed in August to acquire Salt Creek Midstream's crude gathering business, and it said an equity offering will partly finance both deals while preserving room for further acquisitions.
On the financial guardrails, Enbridge said the Tallgrass transaction is expected to increase distributable cash flow per share in its first full year of ownership. The company is holding its leverage target at 4.5 to 5.0 times debt-to-adjusted EBITDA and reaffirmed a medium-term goal of roughly 5% compound annual growth across EBITDA, distributable cash flow per share and earnings per share. Enbridge said it expects no material impact on its 2026 financial guidance, with closing expected later this year.
The next milestone is antitrust clearance in the U.S., with PXP2's late-2027 in-service date the first hard operational test once the combined system is running.
Related reading
Filed via finance.yahoo.com