Enbridge Buys U.S. Gulf Coast Light Export Platform

Enbridge Inc (ENB), North America’s largest energy infrastructure company, announced Tuesday it has acquired Moda Midstream Operating, LLC from private-equity firm EnCap Flatrock Midstream for $3 billion in cash. This acquisition will bolster Enbridge’s presence in the U.S. Gulf Coast region.

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The agreement gives the pipeline company access to Moda’s export terminal, the Ingleside Energy Center, and other assets such as Cactus II pipeline, Viola pipeline, and Taft Terminal. (See Enbridge Inc stock charts on TipRanks)

Enbridge president and CEO Al Monaco said, “We’re very excited about acquiring North America’s premium, very large crude carrier (VLCC) capable, crude export terminal. Over the last several years we’ve been building a strong position in the U.S. Gulf Coast through both natural gas and crude infrastructure.

“Our strategy is driven by the important role that low cost, sustainable North America energy supply will play in meeting growing global demand. With close proximity to world-class Permian reserves, and with cost effective and efficient export infrastructure, our new Enbridge Ingleside terminal will be critical to capitalizing on North America’s energy advantage.”

Monaco added that Enbridge plans to develop solar power capacity at the terminal site, which will ensure this is the most sustainable export facility in North America and support the goal of net zero by 2050 at the company level.

The deal, which is expected to close in the fourth quarter, should be immediately accretive to earnings per share and distributable cash flow per share.

Last week, CIBC analyst Robert Catellier maintained a Buy rating on ENB with a C$57.00 price target. This implies 12.7% upside potential.

Overall, ENB scores a Strong Buy consensus rating among analysts, based on nine Buys and two Holds. The average Enbridge price target of C$57.11 implies 13.2% upside potential to current levels.

TipRanks’ Smart Score

Enbridge scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market.