Analyst Note
| Stephen Ellis |Enbridge has agreed to acquire Moda Midstream for $3 billion in cash in what we think is a fairly priced deal. The crown jewel of the acquisition is Ingleside Energy Center, which loaded 25% of all U.S. Gulf Coast oil exports in 2020. The asset can export 1.5 million barrels per day and has over 15 million barrels of storage. At 8 times forward EBITDA, the price looks fair to us, as it already reflects nearly all of the center’s earnings potential. With an earnings contribution of $375 million, the deal represents only about 3.5% of Enbridge’s expected 2021 EBITDA of just over $10.5 billion. As a result, we consider the deal immaterial to our fair value estimate, and our narrow moat rating is unchanged.