$DVN (+2%) announces strategic midstream partnership with Crosstex (XTEX/XTXI); could be a trend-setter. DVN plans to contribute its midstream assets and $100MM for a 70% interest in Crosstex GP (XTXI) and 53% of Crosstex LP (XTEX).
This transaction allows an immediate value-mark for DVN’s midstream assets (Both LP and GP), reduces risk and time associated with MLP start-up, and improves the LT growth profile of the MLP.
It also provides Crosstex with a critical upstream sponsor for future growth. The transaction is a “win-win” for both parties in our view and could mark the beginning of a trend for upstream operators (strategic partnerships rather than MLP formation). Deal to close 1Q14.
$DVN The recent sale of Canadian assets is a strategic step aimed at focusing on liquid production growth, while the proceeds will be used to reduce debt.