Energy Transfer expands Permian presence with $3.25-B acquisition of WTG Midstream

(Reuters)—Energy Transfer said it will buy WTG Midstream Holdings in a deal valued at about $3.25 B, the latest acquisition in the midstream sector aimed at expanding transportation and processing network in the Permian Basin.

Dealmaking in the pipeline sector has been picking up lately as some companies look to cut costs, while others seek more access at scale to attractive oil and gas producing regions, including the largest U.S. oil shale patch, the Permian basin, as well as export facilities on the U.S. Gulf Coast.

The WTG deal, expected to close in 3Q 2024, will comprise $2.45 B in cash and about 50.8 MM newly issued 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 MM.

WTG's assets include a 6,000-mi pipeline network that serves the Midland Basin, eight processing plants with a total capacity of 1.3 Bft³d, and two new plants that are under construction.

Energy Transfer expects the WTG assets to add nearly $0.04 of distributable cash flow (DCF) per share in 2025, growing to nearly $0.07 per share in 2027.

The acquisition also includes a 20% interest in the BANGL Pipeline, a roughly 425-mi natural gas pipeline connecting the Permian Basin to markets on the Texas Gulf Coast.

Energy Transfer is one of three companies looking to build a deepwater port along the Texas coast and expects to receive a draft Environmental Impact Statement (EIS) for its offshore terminal this quarter.

Last year, the company also bought Crestwood Equity Partners for $7.1 B, Lotus Midstream for $1.45 B, while its affiliate, Dallas-based Sunoco, acquired NuStar Energy in a $7.3-B deal.

(Reporting by Seher Dareen in Bengaluru; Editing by Savio D'Souza, Ravi Prakash Kumar and Shailesh Kuber)

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