Devon Energy Corp. has agreed to combine its U.S. midstream assets with those of Dallas-based Crosstex Energy LP to form a new midstream business, the companies announced Monday morning.
The new company, which will be named before the Devon-Crosstex deal closes early next year, is expected to have adjusted earnings of about $700 million in 2014.
“The combined company's midstream assets and expertise greatly accelerate the value proposition of Devon's previously announced stand-alone master limited partnership in a manner that is highly accretive to our shareholders,” Devon CEO John Richels said. “Additionally, this transaction provides Devon a market-based valuation for these assets on a go forward basis.”
Devon had been moving toward creating a master limited partnership for its midstream assets, a notion first raised during February's fourth-quarter earnings call. Spinoff Devon Midstream Partners LP filed a registration statement with the U.S. Securities and Exchange Commission on Sept. 27.