EnLink Midstream Partners LP (ENLK) and EnLink Midstream LLC (ENLC) announced that ENLK signed a definitive agreement to acquire Coronado Midstream Holdings LLC. Coronado owns natural gas gathering and processing facilities in the Permian Basin. The purchase price is about $600 million, subject to certain adjustments.

Coronado operates three cryogenic gas processing plants and a gas gathering system in the North Midland Basin, including: about 270 miles of gathering pipelines; 175 million cubic feet per day (MMcf/d) of processing capacity; and 35,000 horsepower of compression. Construction to expand the processing capacity to 275 MMcf/d and to expand the system’s gathering capacity are underway. The system has current inlet volumes of about 100 MMcf/d. EnLink plans to connect the Coronado system with its Bearkat system to create a multi-county rich gas gathering and processing system. The Coronado system is underpinned by long-term contracts, including the dedication of production from more than 190,000 acres.

Coronado’s current owners will receive $240 million in cash, $180 million of ENLK common units and $180 million of a new class of ENLK common units, subject to certain adjustments. ENLK will be able to pay distributions on the new class of common units in cash or in additional common units of such new class, at ENLK’s election. The new class of common units will be entitled to receive distributions equal to those paid on the common units currently outstanding. After five quarters of distributions have been paid once the transaction closes, or earlier at ENLK’s election, the new class of common units will convert into the same class of common units that are currently outstanding.

EnLink expects the acquisition will be neutral to distributable cash flow per unit at both the partnership and the general partner levels in the near-term. The companies expect increased activity around Coronado’s system during the next few years that will generate significant accretion in distributable cash flow per unit. EnLink expects its total investment will be about seven to eight times Coronado’s adjusted EBITDA with the timing dependent on the recovery of commodity prices and an increase in producer activity, taking into consideration expected additional capital investments of $400 million to $600 million.