Devon Energy (DVN) has agreed to sell its 12.5% equity interest in Matterhorn Express Pipeline for $375MM, placing a marker on the value of the newest Permian natural gas pipeline. East Daley estimates a $5.5-6.1B enterprise value based on the transaction.
DVN is one of the largest shippers on Matterhorn. According to 549D intrastate pipeline data filed with the Federal Energy Regulatory Commission (FERC) and tracked by East Daley Analytics, DVN has a firm transport contract for 250,000 MMBtu/d (see chart). The transaction does not change the producer’s underlying contract with the pipeline.
Following the deal, WhiteWater Midstream will hold a 65% interest in the asset, while MPLX and Enbridge (ENB) will each hold a 10% interest. WhiteWater’s 65% stake will be backed by First Infrastructure Capital (62%) and I-Squared (38%).
Why it Matters: Matterhorn plans to add compression and expand from 2.0 Bcf/d to 2.5 Bcf/d. In Moody’s debt rating published on May 6, the timing of the expansion is disclosed to be 4Q25, which is later than EDA’s expected in-service date (ISD) of July ’25 in the Permian Basin and Houston Ship Channel Supply & Demand reports.
If the ISD is pushed to 4Q25, Waha will continue to trade at a discount for a few extra months, and we could see downside to prices relative to the forward curve (shown in the chart). This would 1) keep a cap on supply growth until 4Q25 vs 2H25 – slower growth for Permian producers already slowed by lower WTI crude prices and 2) present marketing earnings upside for shipper with spare capacity on Matterhorn.
Valuation Read-Through:
- Equity: The $375MM for the 12.5% equity interest grossed to 100% implies an equity value of $3.0B. If we slap on a 20% premium for a controlling ownership piece, the equity value is $3.6B.
- Debt: The Moody’s report notes debt held at the operating company was $2.25B as of March ’25.
- Implied Enterprise Value: The total value of the asset is $5.5-6.1B based on the market value of equity and known debt outstanding.
- Based on EDA’s forecasted run-rate EBITDA of $425MM, that represents a 13.0x-14.4x multiple, a promising read-through to the market value of similar assets.
The sale by Devon makes sense. DVN’s initial investment in Matterhorn helped get the project off the ground, and the transport contract ensures a premium downstream market in Katy for its Permian gas. But operating gas transmission lines is not one of the producer’s core competencies.
Consolidation is often a pre-cursor to non-core asset sales, especially in a lower commodity price environment. EDA expects companies like DVN will look to non-core asset divestitures to shore up leverage or stash dry powder for reinvestment into core business activities.
We closely monitor Matterhorn performance and filings for clients. Reach out to East Daley to learn more about the Form 549D and other FERC data available in the FERC Products package. – Rob Wilson, CFA Tickers: DVN, ENB, MPLX.
Get the FERC Intrastate Pipeline Data
Introducing East Daley’s latest data file: FERC 549D Intrastate Contract Data. This new offering delivers contract shipper data for intrastate pipelines — scrubbed and ready to use. Use the 549 data to identify which intrastate pipelines have available capacity, understand pipeline rate structures, gain insights into shippers, and spot contract cliffs and opportunities for higher rate renewals. Reach out to East Daley to learn more.
The Daley Note
Subscribe to The Daley Note for energy insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.
-1.png)