Energy Transfer (ET) Acquires WTG Midstream to Expand Business

LP Energy Transfer ET has completed its previously announced acquisition of WTG Midstream Holdings LLC. The company paid $2.28 billion in cash and nearly 50.8 million newly issued ET common units to complete the acquisition.

The acquisition expanded Energy Transfer’s presence in the Midland Basin by adding 6,000 miles of supplemental gas pipelines to the region. The transaction added eight gas processing plants with a combined capacity of 1.3 billion cubic feet per day and two additional processing plants under construction.

Benefits of the acquisition

Completion of the acquisition will provide Energy Transfer with additional revenue from gathering and processing businesses, along with downstream transportation and fractionation fees. The company expects the WTG assets to add 4 cents of distributable cash flow per common unit in 2025, increasing to approximately 7 cents per common unit in 2027.

Expansion through acquisitions

Energy Transfer, in addition to using organic methods to expand its business, has been making strategic acquisitions to expand its business. Last year, the company acquired Crestwood Equity Partners LP. With that acquisition, the company now owns and operates more than 125,000 miles of pipeline and related assets in all major producing regions of the United States.

Other midstream companies are also making acquisitions to expand their businesses. Antero Midstream Corporation AM has completed the acquisition of the Marcellus Shale gathering and compression assets for $70 million Summit Midstream Partners LP SMLP. The assets acquired in May 2024 include two compressor stations and 48 miles of high-pressure gas gathering pipeline. The acquisition is expected to be more than 5% accretive to free cash flow after dividends through 2027.

Price performance

Over the past six months, the company’s shares have gained 23.9%, while the overall industry has seen a gain of 20.5%.

Image Source: Zacks Investment Research

Zack’s Rank

Energy Transfer currently has a Zacks Rank of #3 (Hold). You can see The complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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