Enbridge (TSX: ENB) confirmed Wednesday it has a deal to take over Tallgrass Energy‘s crude oil operations from Blackstone (NYSE: BX) for US$2.55 billion in cash, gaining control of a major crude corridor linking the US Rockies to Cushing, Oklahoma. Word of the deal moved fast — initial reports Wednesday morning had the two sides still negotiating a price near $2 billion. By evening, Enbridge had made it official at a higher number.
The purchase includes a 75% stake in the Pony Express Pipeline — the 1,050-mile line carries around 460,000 barrels of crude daily out of Rockies production areas into Cushing. A 51% stake in Wyoming’s Powder River Gateway system comes with it, along with roughly 8.4 million barrels of storage spread across nine terminals and Stanchion Energy, a crude marketing arm.
A planned $300 million expansion, already backed by take-or-pay contracts, would push Pony Express’s capacity to about 515,000 barrels a day by late 2027.
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Colin Gruending, who heads Enbridge’s liquids pipelines business, said the deal “strengthens Enbridge’s position as North America’s leading crude oil transporter” while extending its reach into the Rockies.
Enbridge struck a similar deal last month too, picking up Salt Creek Midstream’s Permian gathering assets for $600 million. To help cover both deals, the company launched a C$2.6 billion share offering.
Read: Enbridge’s Permian Deal Extends Canada’s Deep Footprint in US Pipelines
The deal comes amid a leadership handoff. Enbridge announced Tuesday that Greg Ebel, 62, is stepping aside as CEO after a four-year run, with Michele Harradence — who currently leads the company’s gas distribution business — taking over.
Investors weren’t entirely sold — Enbridge shares slipped about 1.9% in after-hours trading following the announcement.
