Enbridge to Buy Tallgrass Crude Pipeline Business for $2.55 Billion
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Enbridge has agreed to acquire Tallgrass Energy's crude transportation business for $2.55 billion in cash, adding major pipeline and storage assets connecting U.S. Rockies production with the Cushing, Oklahoma, oil hub. The transaction includes a 75% interest in the 1,050-mile Pony Express Pipeline, which has capacity of roughly 460,000 barrels per day, and a 51% interest in the Powder River Gateway system with combined capacity of about 240,000 bpd, as well as approximately 8.4 million barrels of crude storage across nine terminals. Enbridge said the purchase price represents an estimated forward enterprise value-to-EBITDA multiple of between 10 and 11 times. The acquisition also includes the PXP2 expansion project, a roughly $300 million investment expected to lift Pony Express capacity to approximately 515,000 bpd, backed by take-or-pay contracts and expected to enter service in late 2027. Enbridge plans to add PXP2 to its secured growth backlog, currently valued at $41 billion. The deal follows Enbridge's August agreement to acquire Salt Creek Midstream's crude gathering business. Enbridge expects the acquisition to increase distributable cash flow per share during its first full year of ownership, with no material impact on its 2026 financial guidance. The transaction is subject to regulatory approvals and is expected to close later in 2026.
Source report
Charles Kennedy Wed, September 9, 2026 at 6:30 PM PDT | 3 min read
Enbridge has agreed to acquire Tallgrass Energy's crude transportation business for $2.55 billion in cash, adding major pipeline and storage assets that connect U.S. Rockies production with the Cushing, Oklahoma, oil hub.
Key Assets in the Transaction
The deal includes:
- 75% interest in the 1,050-mile Pony Express Pipeline, which has a capacity of approximately 460,000 barrels per day (bpd) and links Rockies crude production with Cushing and roughly 500,000 bpd of refining capacity
- 51% interest in the Powder River Gateway system, which includes two pipelines with a combined capacity of about 240,000 bpd
- Approximately 8.4 million barrels of crude storage across nine terminals
Strategic Rationale
The assets provide Enbridge with stronger connectivity between the Bakken, Powder River Basin, and Denver-Julesburg Basin and Cushing, complementing its existing Express-Platte system.
Enbridge stated that the $2.55 billion purchase price represents an estimated forward enterprise value-to-EBITDA multiple of between 10 and 11 times.
PXP2 Expansion Project
The acquisition also includes the PXP2 expansion project, a roughly $300 million investment expected to increase Pony Express capacity to approximately 515,000 bpd. The project is backed by take-or-pay contracts and is expected to enter service in late 2027. Upon closing, Enbridge plans to add PXP2 to its secured growth backlog, currently valued at $41 billion.
Broader Portfolio Growth
This deal marks another expansion of Enbridge's U.S. crude infrastructure portfolio, following its August agreement to acquire Salt Creek Midstream's crude gathering business. Enbridge noted that an equity offering will partly finance both acquisitions while providing additional funding flexibility for future growth.
Financial Outlook
Enbridge expects the acquisition to:
- Increase distributable cash flow per share during its first full year of ownership
- Have no material impact on its 2026 financial guidance, as the transaction is expected to close later this year
The company is maintaining its leverage target of 4.5 to 5.0 times debt-to-adjusted EBITDA and reaffirmed its medium-term target of roughly 5% compound annual growth in EBITDA, distributable cash flow per share, and earnings per share.
Regulatory Approvals
The transaction remains subject to regulatory approvals, including U.S. antitrust clearance, and is expected to close later in 2026.
By Charles Kennedy for Oilprice.com
Source
Yahoo FinanceWestern