Energy Transfer expands presence in Permian with $3.25 billion acquisition of WTG Midstream

May 28 (Reuters) – Energy Transfer said Tuesday it will buy WTG Midstream Holdings in a deal valued at about $3.25 billion, the latest midstream acquisition aimed at expanding its transportation and processing network in the Permian Basin.

Dealmaking in the pipeline sector has been gaining momentum recently as some companies look to reduce costs while others seek greater large-scale access to attractive oil and gas producing regions, including the largest US oil shale field, the Permian Basin, as well as export facilities in coast of the Gulf of Mexico.

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The WTG transaction, which is expected to close in the third quarter of 2024, will include $2.45 billion in cash and approximately 50.8 million newly issued Energy Transfer shares.

Energy Transfer will acquire WTG from affiliates of Stonepeak, Davis Estate and Diamondback Energy. Once the transaction closes, Diamondback, which owns a 25% stake in WTG, will receive approximately $375 million.

WTG’s assets include a 6,000-mile pipeline network that serves the Midland Basin, eight processing plants with a combined capacity of 1.3 billion cubic feet per day, and two new plants under construction.

Energy Transfer expects WTG assets to add nearly $0.04 to distributed cash flow (DCF) per share in 2025, increasing to nearly $0.07 per share in 2027.

The acquisition also includes a 20% interest in the BANGL Pipeline, an approximately 700 km long natural gas pipeline connecting the Permian Basin with 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 marine terminal this quarter.

The company also bought Crestwood Equity Partners for $7.1 billion last year, Lotus Midstream for $1.45 billion, and its subsidiary, Dallas-based Sunoco, acquired NuStar Energy for $7.3 billion.

(Reporting by Seher Dareen in Bengaluru; Editing by Savio D’Souza and Ravi Prakash Kumar)