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OGE Energy (OGE) Arm Unveils Merger Completion of ET and ENBL
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OGE Energy Corp.’s (OGE - Free Report) subsidiary,Oklahoma Gas and Electric Company (OG&E),announced the successful completion of the merger between Enable Midstream Partners, LP and Energy Transfer LP (ET - Free Report) . This transaction is expected to take OGE Energy a step closer tobecoming a pure electric utility player.
Details of the Deal
Per the deal, OGE Energy will receive 95,389,720 common units of Energy Transfer in exchange for 110,982,805 common units of Enable owned by OGE Energy upon closing of the merger. This,in turn,makes OGE Energy a 3% shareholder in Energy Transfer, which is valued at approximately $753 million as of Dec 2, 2021.
Upon conclusion of the merger, Centre Point will pay OGE Energy $30 million against the general partner interest in Enable Midstream.
Benefit to OGE Energy
Prior to the merger, OGE Energy had a 25.5% limited partner interest and 50% general partner interest in Enable Midstream Partners. As a result of the merger, the ownership reduces to 3% in the merged company, thus making the elimination of midstream businesses easy for OGE Energy.
With the merger, OGE Energy reduces its exposure to commodity price fluctuations, which have been negatively impactingits overall results in the past few quarters. Themerger also paves the way for OGE Energy to completely transition to apure electric utility player.
OGE Energy intends to exit a majority of the Energy Transfer investment by the end of 2022, with an aim to strengthen its balance sheet further and use the cash proceeds for investment in electric utility projects.
Details of Enable Midstream Partners
Enable Midstream Partners, LP owns, operates, and develops midstream energy infrastructure assets in the United States. OGE Energy and CenterPoint Energy (CNP - Free Report) together owned approximately 79% of Enable’s outstanding common units.
Energy Transfer LP acquired Enable Midstream Partners under an all-equity transaction valued at approximately $7.2 billion. Per terms of the agreement,Enable’s common unitholders will receive 0.8595 ET common units for each Enable common unit.
Merger to Enable Transfer: Key Talking Points
The merger of Enable Midstream Partners with Enable Transfer provides an opportunity to the latter to further expand its presenceacross various regions, supported by Enable Midstream’s improved connectivity for natural gas and natural gas transportation businesses. It solidifies Energy Transfer’s position by enabling it to generate over $100 million of annual run-rate cost and efficiency synergies, excluding potential financial and commercial synergies.
Further, the buyout strengthens Enable Transfer asset base and pipeline infrastructure across its various operational regions. Thedeal enhances the ability of Enable Transfer to distribute free cash supported by fee-based cash flows from fixed-fee contracts. Additionally, the acquisition allowsEnable Transfer to cater to markets with strong demand.
CenterPoint Energy’s Gains
CentrePoint had 53.7% ownership interest in Enable Midstream. The aforementioned merger provides a boost to CentrePoint’s 10-year plan to grow strategically by investing in pure-play regulated business. The merger takes the company one step closer tofully exiting the midstream businesses by the end of 2022.
Per the deal, CenterPoint’s 53.7% of Enable Midstream common units converted into 201 million ET common units. The settlement further includes an option for forward sale of 50 million ET common units. This represents approximately 25% of CenterPoint’s ownership in ET common units, upon the completion of the merger between Enable Midstream and ET.
Price Movement
In the past one year, shares of OGE Energy have gained 7.8% compared with the industry’s growth of 2.3%.
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OGE Energy (OGE) Arm Unveils Merger Completion of ET and ENBL
OGE Energy Corp.’s (OGE - Free Report) subsidiary,Oklahoma Gas and Electric Company (OG&E),announced the successful completion of the merger between Enable Midstream Partners, LP and Energy Transfer LP (ET - Free Report) . This transaction is expected to take OGE Energy a step closer tobecoming a pure electric utility player.
Details of the Deal
Per the deal, OGE Energy will receive 95,389,720 common units of Energy Transfer in exchange for 110,982,805 common units of Enable owned by OGE Energy upon closing of the merger. This,in turn,makes OGE Energy a 3% shareholder in Energy Transfer, which is valued at approximately $753 million as of Dec 2, 2021.
Upon conclusion of the merger, Centre Point will pay OGE Energy $30 million against the general partner interest in Enable Midstream.
Benefit to OGE Energy
Prior to the merger, OGE Energy had a 25.5% limited partner interest and 50% general partner interest in Enable Midstream Partners. As a result of the merger, the ownership reduces to 3% in the merged company, thus making the elimination of midstream businesses easy for OGE Energy.
With the merger, OGE Energy reduces its exposure to commodity price fluctuations, which have been negatively impactingits overall results in the past few quarters. Themerger also paves the way for OGE Energy to completely transition to apure electric utility player.
OGE Energy intends to exit a majority of the Energy Transfer investment by the end of 2022, with an aim to strengthen its balance sheet further and use the cash proceeds for investment in electric utility projects.
Details of Enable Midstream Partners
Enable Midstream Partners, LP owns, operates, and develops midstream energy infrastructure assets in the United States. OGE Energy and CenterPoint Energy (CNP - Free Report) together owned approximately 79% of Enable’s outstanding common units.
Energy Transfer LP acquired Enable Midstream Partners under an all-equity transaction valued at approximately $7.2 billion. Per terms of the agreement,Enable’s common unitholders will receive 0.8595 ET common units for each Enable common unit.
Merger to Enable Transfer: Key Talking Points
The merger of Enable Midstream Partners with Enable Transfer provides an opportunity to the latter to further expand its presenceacross various regions, supported by Enable Midstream’s improved connectivity for natural gas and natural gas transportation businesses. It solidifies Energy Transfer’s position by enabling it to generate over $100 million of annual run-rate cost and efficiency synergies, excluding potential financial and commercial synergies.
Further, the buyout strengthens Enable Transfer asset base and pipeline infrastructure across its various operational regions. Thedeal enhances the ability of Enable Transfer to distribute free cash supported by fee-based cash flows from fixed-fee contracts. Additionally, the acquisition allowsEnable Transfer to cater to markets with strong demand.
CenterPoint Energy’s Gains
CentrePoint had 53.7% ownership interest in Enable Midstream. The aforementioned merger provides a boost to CentrePoint’s 10-year plan to grow strategically by investing in pure-play regulated business. The merger takes the company one step closer tofully exiting the midstream businesses by the end of 2022.
Per the deal, CenterPoint’s 53.7% of Enable Midstream common units converted into 201 million ET common units. The settlement further includes an option for forward sale of 50 million ET common units. This represents approximately 25% of CenterPoint’s ownership in ET common units, upon the completion of the merger between Enable Midstream and ET.
Price Movement
In the past one year, shares of OGE Energy have gained 7.8% compared with the industry’s growth of 2.3%.
Zacks Rank
OGE Energy currently carries a Zacks #3 (Hold). You can see the complete list today’s Zacks #1 Rank (Strong Buy) stocks here.