UPDATE 1-Devon Energy, Crosstex to form pipeline company
Oct 21 (Reuters) - Devon Energy Corp said on Monday it would combine all its U.S. natural gas and oil pipeline, processing and related infrastructure assets with those owned by Crosstex Energy Inc and Crosstex Energy LP to form a new midstream business.
The new company, which does not have a name yet, will have 7,300 miles of gathering and transportation pipelines, 13 natural gas processing plants with 3.3 billion cubic feet per day of net capacity and other infrastructure assets, the companies said in a statement. It is expected to have adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of about $700 million in 2014.
The new business will consist of two publicly traded companies, a master limited partnership (MLP) and the general partner that will control the MLP. Devon -- which said the values of its contributed assets are about $4.8 billion -- will have a controlling stake in both entities.
Crosstex Energy Inc shareholders will receive one unit in the new general partner, plus $2 per share in cash, for each Crosstex Energy Inc share they own. Crosstex Energy LP's unitholders will end up with a 40 percent stake in the new MLP.
Many energy companies have used tax-advantaged MLPs as a means of unlocking the value for the infrastructure that is used to transport oil and natural gas to market.
Devon had previously announced plans to create its own publicly traded MLP in June. The deal with Crosstex replaces that plan, it said.