Enbridge, MPLX, and I Squared seal $375m Matterhorn deal as Devon exits Permian pipeline

Why Are Enbridge, MPLX, and I Squared Investing in the Matterhorn Express Pipeline?

Enbridge Inc. (NYSE: ENB), MPLX LP (NYSE: MPLX), and infrastructure investor I Squared Capital have reached a definitive agreement to acquire equity stakes in the Matterhorn Express Pipeline from Ridgemont Equity Partners and Devon Energy Corporation (NYSE: DVN). This strategic transaction will rebalance ownership of the pipeline, with WhiteWater retaining a 65% stake and operational control. Post-close, MPLX and Enbridge will each hold 10% equity interests, while WhiteWater’s interest will be backed by both FIC and I Squared.

The acquisition is expected to close in the second quarter of 2025, subject to customary regulatory and closing conditions.

What Is the Strategic Role of the Matterhorn Express Pipeline?

The Matterhorn Express Pipeline, operational since November 2024, plays a central role in transporting natural gas from the Waha hub in the Permian Basin to Wharton, Texas, with optional delivery to Katy. With a total contracted capacity of approximately 2.5 billion cubic feet per day (Bcf/d), the 510-mile mainline system includes 36-inch and 42-inch diameters, compression assets, and two 36-inch lateral pipelines extending into the Midland Basin.

One lateral measures roughly 50 miles, the other about 85 miles. These enhance the pipeline’s capacity to capture feedstock from various sub-regions within the Permian and deliver it to Gulf Coast and export terminals.

The project has been widely viewed as one of the most critical recent infrastructure builds supporting growing gas output from the shale-rich Permian region. With U.S. LNG export demand rising and domestic consumption remaining steady, takeaway capacity has become an investment magnet for energy infrastructure players.

Why Did Devon Energy Sell Its Stake, and What Are the Implications?

On May 5, 2025, Devon Energy announced its decision to divest its equity interest in the Matterhorn Express Pipeline for approximately $375 million. The company stated that proceeds from the transaction would be used to reinforce its investment-grade balance sheet. Importantly, the divestiture will not affect Devon’s contracted transportation capacity, ensuring that the company can maintain steady production outflows while freeing up capital.

The move aligns with a broader trend among exploration and production (E&P) companies to streamline portfolios by exiting capital-intensive midstream positions while preserving operational flexibility via long-term agreements.

This sale enables Devon to optimise returns, reallocate capital towards drilling and shareholder distributions, and reduce non-core exposure.

How Do MPLX and Enbridge Stand to Gain from the Deal?

For MPLX LP, the deal complements its existing Permian footprint. The company is focused on acquiring low-risk, fee-based assets that support distributable cash flows. The Matterhorn Express acquisition delivers precisely that: high-capacity contracted infrastructure with minimal development risk. It integrates seamlessly with MPLX’s gathering and processing systems and strengthens downstream connections to U.S. Gulf Coast markets.

Enbridge Inc., meanwhile, continues its strategic pivot into natural gas infrastructure. The Canadian energy giant has made notable U.S. investments in LNG and pipeline transportation and views natural gas as a key pillar in its energy transition strategy. By securing a 10% stake in Matterhorn, Enbridge gains incremental exposure to fast-growing Permian production while supporting its long-term earnings diversification goals.

Both companies are expected to derive stable income from the asset due to its fully contracted throughput and location advantage.

What Is the Role of I Squared Capital and WhiteWater Post-Transaction?

I Squared Capital’s support of WhiteWater’s expanded equity position aligns with its long-term infrastructure investment philosophy. The firm, known for backing essential infrastructure globally, is betting on the durability of U.S. gas transport assets amid growing LNG demand and Permian output.

WhiteWater will remain the operator of the pipeline, continuing to manage scheduling, throughput optimisation, and system maintenance. With its asset base spanning the Permian and Eagle Ford basins, WhiteWater has emerged as a trusted operator of high-capacity infrastructure that connects production centres to critical hubs.

By maintaining operational control and partnering with institutional capital, WhiteWater strengthens its position in the North American midstream market.

How Are Markets Reacting to the Pipeline Reshuffle?

Devon Energy Corporation (NYSE: DVN)

As of May 6, 2025, Devon’s stock closed at $30.59, edging down 0.1%. The company recently reported Q1 2025 earnings with net income of $494 million and core earnings of $779 million, delivering $1.21 in EPS. Operating cash flow reached $1.9 billion, with free cash flow at $1 billion.

Devon returned $464 million to shareholders in Q1 through dividends and buybacks. The divestment of its Matterhorn stake is seen as strengthening its balance sheet without compromising output flexibility.

Analyst sentiment remains positive, with a consensus “Outperform” rating and a 12-month price target of $44.63—suggesting a 45.9% upside. The company’s continued focus on capital discipline and strong free cash flow makes it a preferred upstream pick for many institutional investors.

Buy/Sell/Hold Tip: Buy, given strong cash flows, disciplined capital allocation, and upside potential.

MPLX LP (NYSE: MPLX)

MPLX’s stock closed at $49.79 on May 6, 2025, down 1.66% on the day. The company delivered Q1 2025 adjusted EBITDA of $1.8 billion, a 7% YoY increase, and net income of $1.126 billion. Distributable cash flow came in at $1.5 billion, supporting a quarterly payout of $0.9565 per unit.

Despite solid fundamentals, the stock slipped marginally amid sector-wide volatility. Analysts continue to maintain a “Hold” consensus, citing MPLX’s dependable distribution policy and low-risk growth strategy as stabilising factors. The pipeline stake is viewed as a logical bolt-on that adds long-term contracted revenues.

Buy/Sell/Hold Tip: Hold, with potential upside contingent on improved sector sentiment and further acquisitions.

Enbridge Inc. (NYSE: ENB)

Enbridge closed at $46.16, down 0.9% on May 6, 2025. The company maintains an attractive dividend profile, offering a quarterly payout of $0.9425, translating to an annualised dividend of $3.77.

With its diversified portfolio of oil and gas infrastructure and growing exposure to renewable energy, Enbridge remains a key holding for income-focused investors. The Matterhorn stake reinforces its strategy of targeting long-term cash-flow stability through diversified gas assets.

Analysts remain constructive, with bullish sentiment around Enbridge’s future positioning as a gas transition leader.

Buy/Sell/Hold Tip: Buy, especially for income-seeking investors focused on yield sustainability.

What Are the Broader Implications for Midstream Sector Investment?

The Matterhorn Express transaction exemplifies a growing trend in U.S. energy infrastructure where institutional capital replaces legacy E&P owners. Infrastructure funds and midstream operators are increasingly co-investing in critical assets, ensuring long-term viability through contractual certainty and operational expertise.

This pivot reflects macroeconomic tailwinds: rising U.S. gas production, growing LNG exports, and the global energy transition’s shift toward lower-carbon fuels. Assets like Matterhorn—strategically located and fully contracted—are positioned to deliver steady returns regardless of short-term commodity volatility.

This deal may also pave the way for further midstream M&A in 2025, particularly as energy infrastructure valuations remain attractive relative to broader equities.