May 29, 2024 [Storage Terminals Magazine]- Energy Transfer LP and WTG Midstream, LLC announced a definitive agreement in which Energy Transfer will acquire WTG Midstream Holdings LLC for approximately $3.25 billion. The transaction involves $2.45 billion in cash and about 50.8 million newly issued Energy Transfer common units. The acquisition is expected to close in the third quarter of 2024, pending regulatory approval and customary closing conditions.
WTG Midstream offers extensive midstream services, including wellhead gathering, intra-basin transportation, and processing. Its 6,000-mile pipeline network serves key operators in the Midland Basin, particularly in Martin, Howard, Upton, Reagan, and Irion counties. WTG operates eight processing plants with a combined capacity of approximately 1.3 billion cubic feet per day and is constructing two additional plants to add another 0.4 Bcf/d. The first of these new plants is slated for service in the third quarter of 2024, and the second in the third quarter of 2025.
The WTG system processes significant volumes from large-cap, investment-grade producers with firm, long-term contracts and acreage dedications. The addition of WTG assets will enhance Energy Transfer’s access to growing natural gas and natural gas liquids supplies, boosting its Permian operations and downstream businesses. The acquisition also includes a 20 percent stake in the BANGL Pipeline, a 425-mile NGL pipeline connecting the Permian Basin to the Texas Gulf Coast with an initial capacity of 125,000 barrels per day, expandable to over 300,000 Bbls/d.
This acquisition is expected to positively impact Energy Transfer’s financial performance by generating additional revenue from downstream NGL transportation and fractionation fees. Energy Transfer anticipates the WTG assets will contribute approximately $0.04 of Distributable Cash Flow per common unit in 2025, increasing to around $0.07 per common unit by 2027. WTG’s cash flows are supported by a high-quality, predominantly investment-grade customer base with an average contract life exceeding eight years.
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