Devon Energy, Crosstex to form pipeline company

Reuters

Oct 21 (Reuters) - Devon Energy Corp said on Mondayit would combine all its U.S. natural gas and oil pipeline,processing and related infrastructure assets with those owned byCrosstex Energy Inc and Crosstex Energy LP toform a new midstream business.

The new company, which does not have a name yet, will have7,300 miles of gathering and transportation pipelines, 13natural gas processing plants with 3.3 billion cubic feet perday of net capacity and other infrastructure assets, thecompanies said in a statement. It is expected tohave adjusted EBITDA (earnings before interest, taxes,depreciation, and amortization) of about $700 million in 2014.

The new business will consist of two publicly tradedcompanies, a master limited partnership (MLP) and the generalpartner that will control the MLP. Devon -- which said thevalues of its contributed assets are about $4.8 billion -- willhave a controlling stake in both entities.

Crosstex Energy Inc shareholders will receive one unit inthe new general partner, plus $2 per share in cash, for eachCrosstex Energy Inc share they own. Crosstex Energy LP'sunitholders will end up with a 40 percent stake in the new MLP.

Many energy companies have used tax-advantaged MLPs as ameans of unlocking the value for the infrastructure that is usedto transport oil and natural gas to market.

Devon had previously announced plans to create its ownpublicly traded MLP in June. The deal with Crosstex replacesthat plan, it said.

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