Enbridge has agreed to acquire Tallgrass Energy’s crude oil transportation, gathering, storage and terminaling assets for $2.55 billion, substantially expanding its liquids pipeline network into the U.S. Rocky Mountains.
The transaction gives Enbridge new exposure to crude production from the Powder River Basin and Denver-Julesburg Basin, connecting those producing regions with the major Cushing, Oklahoma, crude oil hub.
The assets include a 75% interest in the 1,050-mile Pony Express Pipeline, which runs from Guernsey, Wyoming, and locations in Colorado to Cushing. Pony Express has approximately 460,000 barrels per day of average annual capacity and direct access to roughly 500,000 barrels per day of refining capacity.
Enbridge will also acquire a 51% interest in the Powder River Gateway system, comprising the 80-mile Iron Horse Pipeline and 70-mile Powder River Express Pipeline. Together, those lines have approximately 240,000 barrels per day of capacity and connect the Powder River Basin to Pony Express.
The transaction also includes approximately 8.4 million barrels of storage capacity across nine terminals, including a 60.3% non-operating interest in the Deeprock Crude Terminal in Cushing, as well as Stanchion Energy’s crude marketing business.
Enbridge will assume the $300 million PXP2 expansion project, which is expected to increase Pony Express capacity to 515,000 barrels per day and enter service in late 2027.
The acquired system complements Enbridge’s existing Express-Platte network, which transports crude from Hardisty, Alberta, to Wood River, Illinois.
Pony Express is highly contracted through the decade, primarily with investment-grade counterparties. Enbridge expects the acquisition to generate significant free cash flow, provide additional growth opportunities and create potential operating synergies across its broader liquids pipeline business.
The transaction represents an estimated acquisition multiple of 10x to 11x forward enterprise value to EBITDA and is expected to close later in 2026.
KEY QUOTE:
“The Pony Express system is a premier crude oil corridor connecting some of North America’s most productive basins with key refining and market centers . . . As operator of Pony Express, we look forward to leveraging Enbridge’s proven operational capabilities to safely and reliably serve customers across the system.”
Colin Gruending, Executive Vice President and President of Liquids Pipelines at Enbridge
