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Building the Perfect Beast - Energy Transfer Continues Its Expansion With Crestwood Deal

Over the past four years, Energy Transfer (ET) has completed several major acquisitions, all aimed at giving the company the additional size and reach it will need to compete in an increasingly consolidated midstream sector. On Wednesday, ET announced one of its biggest purchases yet: a $7.1 billion deal to acquire Crestwood Equity Partners, which has extensive gathering and processing assets in the Permian, Powder River and Williston basins, as well as NGL terminal and storage facilities east of the Mississippi. In today’s RBN blog, we look at how the addition of Crestwood’s holdings will extend ET’s value chain and complement its fractionation assets at Mont Belvieu and its export capabilities at both its Nederland and Marcus Hook terminals.

Dallas-based Energy Transfer has been on an M&A roll for a while now, and the big chunks of processing plants, pipelines and other midstream assets it’s been acquiring have been coalescing into what seems like a very logical whole. We’ll get to ET’s big-picture plan in a moment.

We’ll start with the specifics of the Crestwood deal, which calls for ET to acquire the smaller midstream company for about $3.8 billion in ET stock and the assumption of $3.3 billion in debt. In the Williston Basin (aka the Bakken) in western North Dakota (map to left in Figure 1), Crestwood, a master limited partnership (MLP), owns the Arrow and Rough Rider gathering systems, which together have the capacity to gather up to 250 Mb/d of crude oil, 420 MMcf/d of natural gas and 420 Mb/d of produced water. It also owns four gas processing plants with a combined capacity of 430 MMcf/d and the COLT Hub, which has 1.2 MMbbl of crude oil storage capacity and the ability to load up to 160 Mb/d into rail tank cars.

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