Energy Transfer, a US-based energy infrastructure firm, has closed the previously announced acquisition of rival midstream operator WTG Midstream from affiliates of Stonepeak, the Davis Estate, and Diamondback Energy.
The consideration for the acquisition of WTG Midstream was $2.27bn in cash and nearly 50.8 million newly issued common units of Energy Transfer, which is listed on the New York Stock Exchange (NYSE).
Following the acquisition, Energy Transfer has gained assets that include approximately 9,656km of gas gathering pipelines, which will enhance its network in the Midland Basin.
Additionally, the transaction includes eight gas processing plants with a combined capacity of around 1.3 billion cubic feet per day (Bcf/d), along with two more plants currently under construction.
The new plants will add an extra capacity of around 0.4Bcf/d. The first of them is scheduled to be commissioned in Q3 2024, while the second plant is expected to begin operations in Q3 2025.
Overall, the acquisition of WTG Midstream is anticipated to bolster Energy Transfer’s supply of natural gas liquid (NGL) and natural gas volumes. It will help the firm generate additional revenue from gathering and processing operations, as well as from downstream transportation and fractionation fees.
The deal also gives Energy Transfer a stake of 20% in BANGL Pipeline, a nearly 684km long NGL pipeline with an initial capacity of 125,000 barrels per day.
The BANGL Pipeline, which connects the Permian Basin to markets on the Texas Gulf Coast, has an expandable capacity of over 300,000 barrels per day.
Energy Transfer forecasts that the assets added through the deal will contribute approximately $0.04 of distributable cash flow (DCF) per common unit in 2025, with expectations rising to around $0.07 per common unit by 2027.
The publicly traded limited partnership owns and operates a diversified portfolio of energy assets in the US. Its portfolio includes more than 20,92,15km of pipeline and associated energy infrastructure with a network spanning 44 states with assets in all the main production basins.
