Privately-owned Momentum Midstream has agreed to buy pipeline assets in the East Texas part of the Haynesville Shale from Midcoast Energy for $1.3 billion, including debt, people familiar with the matter said.
Houston-based Momentum has been a prolific developer of pipeline companies, although it has been out of the market since 2019 when it sold its fourth and fifth projects to Williams Companies and DT Midstream respectively.
Momentum’s acquisition of Midcoast’s assets is backed by funds from private equity firm EnCap Flatrock Midstream, the sources said.
Midcoast Energy is owned by another buyout firm, ArcLight Capital Partners. Reuters reported in April that Midcoast was hoping to sell assets for as much as $2 billion.
Midcoast, ArcLight, Momentum and EnCap Flatrock all did not respond to comment requests.
Energy pipelines have become more valuable since Russia’s attack on Ukraine in February drove up oil and gas prices to multi-year highs. Private equity firms, which own energy companies, are looking to cash in and divest such assets at high valuations.
However, commodity price volatility is making it hard for buyers to meet the price expectations of sellers. The value of U.S. oil and gas acreage sold in the second quarter was down two-thirds on the same period last year, data provider Enverus said this week.
Midcoast Energy operates a 3,625-mile (5,834 km) gathering and processing pipeline network that transports natural gas and natural gas liquids, as well as a marketing and logistics business, according to its website.
ArcLight bought Midcoast Energy in 2018 for $1.1 billion from pipeline operator Enbridge Inc. It has since sold some of the original pipelines it acquired, including a deal in December to divest assets in Oklahoma to another private equity-backed midstream company.
