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UPDATE 2-Energy Transfer to buy Enable Midstream for $2.6 bln in natgas push

·1 min read

(Adds details on deal, background)

Feb 17 (Reuters) - Energy Transfer LP said onWednesday it would buy Enable Midstream Partners tostrengthen its natural gas transportation business as it faces alegal battle that could shut its Dakota Access crude pipeline.

The $2.6 billion deal comes just weeks after a U.S. appealscourt dealt a blow to the 557,000 barrel-per-day Dakotapipeline, raising the chances that it will be shut pending anenvironmental review.

Higher prices for natural gas used in heating andelectricity generation as well as a continued glut of crude oilhave led U.S. shale firms to boost gas drilling and production.

U.S. gas prices touched a more than three-month high onTuesday, as bone-chilling weather across the country disruptedpipeline flows and pushed up heating demand.

Regulators have in recent weeks also denied permits tonotable natural gas pipelines, while the new Bidenadministration effectively killed the Keystone XL pipelineproject and is soon expected to limit oil and gas drilling onfederal lands.

Enable unitholders will receive 0.8595 of Energy Transfer'sunits for each Enable unit. In addition, each outstanding EnableSeries A preferred unit will be exchanged for 0.0265 Series Gpreferred units of Energy Transfer.

The transaction will also include a $10 million cash paymentfor Enable's general partner and the deal was valued at about$7.2 billion, including debt.

The acquisition will also provide gas gathering andprocessing assets in the Arkoma basin across Oklahoma andArkansas, as well as the Haynesville Shale in East Texas andNorth Louisiana, the companies said.

Energy Transfer expects the combined company to generatemore than $100 million of annual run-rate cost and efficiencysavings and as is expected to immediately add to free cash flowpost-distributions.(Reporting by Arundhati Sarkar in Bengaluru; Editing by ArunKoyyur)