DTE Midstream has signed a deal worth up to $2.65bn to acquire certain midstream assets in the Haynesville shale formation of Louisiana from Momentum Midstream and Indigo Natural Resources.
The assets involved in the deal are an existing gathering system and a 241.4km long gathering pipeline, currently under construction.
DTE Midstream, which is the non-utility business of DTE Energy, will buy 100% of the assets for an initial consideration of $2.25bn in cash. Additionally, the company will make a milestone payment of $400m following the completion of the large diameter gathering pipeline, which is likely to become operational in the second half of 2020.
According to DTE Energy, the primary assets gather natural gas from the Haynesville shale basin and have access to multiple downstream pipelines, including the ones serving the Gulf Coast.
The assets to be acquired are 100% contracted with a remaining tenor of 13.5 years for the existing gathering system along with a 10-year contract for the gathering pipeline.
DTE Midstream CEO comments on the acquisition
DTE Energy president and CEO Jerry Norcia said: “This acquisition significantly enhances the strength and diversity of DTE Midstream, adding premium assets in one of the fastest growing and best positioned U.S. shale formations. The successful operation of the Link asset, also purchased from Momentum, demonstrates the operating expertise and value creation DTE Midstream brings to this new system.
“In addition, the company gains a strong commercial partner in Indigo, one of the nation’s largest private natural gas producers supplying the rapidly growing demand in the Gulf Coast region. This acquisition is highly accretive, has world-class resources, has excellent access to large markets, and is in the early- to mid-cycle development phase.”
The completion of the transaction is expected to take place in the fourth quarter of 2019, subject to meeting of customary closing conditions and receipt of regulatory approvals.
DTE Midstream is engaged in construction, investment, owning and operating gathering, regulated pipelines, and gas storage assets in the US.
Earlier this month, the company through its NEXUS partnership with Enbridge completed the acquisition of Generation Pipeline, a natural gas pipeline in Ohio, which is fully contracted at 355 million cubic feet per day.
