Enbridge Pays $2.55 Billion for Tallgrass Crude Assets

Enbridge is paying $2.55 billion in cash for a crude oil network that reaches from the U.S. Rockies to Cushing, Oklahoma, giving the Canadian pipeline operator a new production corridor and another way to compound fee-based cash flow.

The transaction, announced September 9, includes a 75% interest in the 1,050-mile Pony Express Pipeline, which can transport roughly 460,000 barrels per day from Wyoming and Colorado into Cushing. Enbridge will also take a 51% stake in Powder River Gateway, a pair of Wyoming pipelines with combined capacity of about 240,000 barrels per day, plus approximately 8.4 million barrels of storage across nine terminals and Stanchion Energy’s crude marketing business.

That package matters because it links several producing regions to the market’s most important inland storage hub. Pony Express will connect Enbridge more directly to the Bakken, Powder River and Denver-Julesburg basins, while also offering access to about 500,000 barrels per day of refining capacity. The assets complement Enbridge’s existing Express-Platte system, which moves Canadian crude through the northern Rockies and Midwest.

The growth case is not limited to the assets being purchased. Enbridge is backing the PXP2 project, a roughly $300 million expansion expected to lift Pony Express capacity to about 515,000 barrels per day when it enters service in late 2027. That gives the company a built-in outlet for additional volumes if producers commit enough barrels to support the investment.

Enbridge said the acquisition should generate significant free cash flow and add to distributable cash flow per share in the first full year after closing. Management estimates a purchase price of roughly 10 to 11 times forward enterprise value to EBITDA, a valuation that fits the company’s preference for contracted infrastructure rather than direct exposure to oil prices. Closing is expected later in 2026 and requires customary approvals, including U.S. antitrust clearance.

The financing mix adds a wrinkle for shareholders. Enbridge launched a bought deal for 38.9 million common shares at C$66.85 each, targeting about C$2.6 billion in gross proceeds to help fund Tallgrass, its Salt Creek Midstream purchase and debt repayment. The assets may broaden earnings, but investors will measure that benefit against the near-term dilution.