Latest News

Energy Transfer broadens Permian presence with $3.25 bln WTG Midstream purchase

Energy Transfer said on Tuesday it would purchase WTG Midstream Holdings in an offer valued at about $3.25 billion, the latest acquisition in the midstream sector aimed at broadening transportation and processing network in the Permian Basin.

Dealmaking in the pipeline sector has actually been getting lately as some companies look to cut expenses, while others seek to scale and access to appealing oil and gas producing areas such as the Permian basin and export facilities on the U.S. Gulf Coast.

The WTG offer, anticipated to close in the 3rd quarter of 2024, will make up $2.45 billion in cash and about 50.8 million recently released Energy Transfer shares.

Energy Transfer will acquire WTG from affiliates of Stonepeak, the Davis Estate, and Diamondback Energy. Upon closing, Diamondback, which holds a 25% stake in WTG, stands to get about $375 million.

WTG's possessions include a 6,000-mile pipeline network that serves the Midland Basin, 8 processing plants with a total capability of 1.3 billion cubic feet each day, and 2 new plants that are under building.

As Permian (natural gas liquids) production continues to surprise to the advantage, we would expect considerable commercial synergies in time, Raymond James analysts said in a note.

We see the Delaware (basin) as a bit more fragmented than the Midland, though an offer of WTG's scale reveals that the Midland might still see deals at the corporate scale.

The acquisition likewise consists of a 20% interest in the BANGL Pipeline, a roughly 425-mile gas pipeline connecting the Permian Basin to markets on the Texas Gulf Coast.

Energy Transfer is aiming to build a deepwater port along the Texas coast and anticipates to get a draft environmental impact declaration for its overseas terminal this quarter.

In 2015, the business likewise bought Crestwood Equity Partners for $7.1 billion, Lotus Midstream for $1.45 billion, while its affiliate, Dallas-based Sunoco, obtained NuStar Energy in a $7.3 billion offer.

(source: Reuters)