The deal also removes IDRs from Oasis Midstream Partners’ capital structure
Oasis Midstream Partners (OMP) has agreed to acquire all remaining interests in US midstream entities Bobcat DevCo and Beartooth DevCo from Oasis Petroleum in a deal worth around $510m.
The parties have signed a contribution and simplification agreement in this regard.
Oasis Midstream Partners is a gathering and processing master limited partnership formed by Oasis Petroleum. It was created to own, develop, operate, and acquire midstream assets across North America that are integral to Oasis Petroleum’s oil and gas operations.
The deal also eliminates incentive distribution rights (IDRs) from the capital structure of Oasis Midstream Partners.
Through the simplification, the midstream partnership will increase its stake in Bobcat DevCo to 100% from 35%. In Beartooth DevCo, it will increase its stake from 70% to 100%.
Bobcat DevCo operates gathering infrastructure that caters to the Wild Basin. Its assets are crude oil and natural gas gathering and compression, a natural gas lift system, and also water gathering and disposal system.
On the other hand, Beartooth DevCo is engaged in water gathering and freshwater distribution across the larger acreage position of Oasis Petroleum. Its assets are a pipeline system, freshwater sourcing and distribution, and disposal wells.
Oasis Midstream Partners CEO Taylor Reid said: “This accretive transaction enhances our scale and strengthens OMP’s attractive position in the core of the Williston Basin. OMP is uniquely positioned to benefit from Oasis’s development program and capture additional third party business.
“Volumes from both Oasis and third parties provide a solid foundation through 2021 and beyond. This transaction is extremely attractive for our investors by allowing OMP to increase its scale in an accretive manner, while improving its competitive position to capitalize on future opportunities.”
The simplification also has a right of first refusal in favour of Oasis Midstream Partners pertaining to midstream opportunities in the Painted Woods and City of Williston operating areas of its sponsor company.
Under the terms of the deal, Oasis Midstream Partners will pay $229m in cash and issue 14.8 million of its common units to Oasis Petroleum.
Oasis Petroleum board chair and CEO Douglas Brooks said: “The Simplification increases transparency of Oasis’ midstream ownership and highlights significant value within Oasis while improving OMP’s scale and competitive positioning.
“This transaction is a compelling proposition for both Oasis and OMP investors and was unanimously approved by the board of directors of Oasis and the general partner of OMP as well as its conflicts committee. OMP remains a valuable investment for Oasis and we will continue evaluating additional options for further value enhancement.”
Subject to customary closing conditions, the deal is expected to be closed by the end of this month.