Oklahoma City's OGE Energy Corp. will team up with two other companies to create a master limited partnership for their pipelines and field services in the central United States.
OGE will combine its Enogex LLC midstream assets with pipelines and field services from Houston-based CenterPoint Energy Inc. Boston's ArcLight Capital Partners LLC, which owns almost 20 percent of Enogex, also will be a limited partner in the new enterprise.
The partnership, with combined assets of almost $11 billion, plans to file for an initial public offering.
Combined assets include more than 8,400 miles of interstate pipelines with almost 9 billion cubic feet of transport capacity and another 2,300 miles of intrastate pipelines. It also will have 11,000 miles of gathering lines and 11 major processing plants.
The companies said the deal is expected to close in the second or third quarter of 2013, subject to regulatory approval.
After the deal closes, CenterPoint Energy will have a 59 percent limited partner interest, with OGE having a 28 percent limited partnership interest. Arc-Light will have a 13 percent stake.
A general partner will manage the partnership with governance shared equally by CenterPoint Energy and OGE. The partnership's leadership team will be announced after the deal closes, as will the location of its headquarters.
“The stronger financial and operational capabilities of the new partnership should allow us to realize the full potential of these assets,” said Pete Delaney, chairman and CEO of OGE, in a statement. “We believe all of our shareholders will benefit from the creation of this partnership as a stronger competitor that we expect to be valued on a public MLP (master limited partnership) basis.”
The companies said the partnership will benefit from geographic diversification because they have operations in major natural gas and liquids-rich areas of Oklahoma, Texas, Arkansas and Louisiana. It will also benefit from enhanced supply and market access and independent access to capital.
“We are very excited about creating a substantial, growth-oriented midstream company,” David McClanahan, president and CEO of CenterPoint Energy, said in a statement. “This new company will be a significant participant in the rapidly growing midstream market. With enhanced scale, broader geographic reach and expanded capabilities, the partnership will be able to compete in ways that neither we nor Enogex could do as separate companies.”
The new partnership plans to arrange a $1.4 billion credit agreement and a $1.05 billion term loan.
OGE is the parent company of Enogex and Oklahoma Gas and Electric Co.