Energy Transfer is yet again slaking its acquisition appetite by gobbling up another natural gas gatherer and processor to further expand its already formidable Permian footprint. The company announced May 28 that it has struck a $3.25 billion cash-and-stock deal to buy WTG Midstream, a West Texas-based and private equity-backed operator whose Permian assets will boost the acquiring company’s access to gas and NGL volumes as the U.S. midstream sector shows continued consolidation. In today’s RBN blog, we’ll look at how the addition of WTG’s midstream holdings will enhance Energy Transfer’s asset lineup, including its ongoing NGL export and storage expansions.
Midstream M&A has been quite active in recent years, as noted in our recent Drill Down Report, Let's Work Together. Some notable examples include Enterprise Products Partners’ 2022 acquisition of Navitas Midstream for $3.25 billion and ONEOK’s 2023 purchase of Magellan Midstream Partners for $18.8 billion. Just last week Phillips 66 announced plans to buy Pinnacle Midstream, which we examined in Piece By Piece.
You might say that Dallas-based Energy Transfer (ET) — the focus of today’s blog — has been among the most acquisitive of all midstreamers. The company’s carefully thought-out buying spree started in earnest back in 2019, when the company paid about $5 billion in stock and cash for SemGroup. Most important, perhaps, that deal gave ET the massive Houston Fuel Oil Terminal (and its more than 18 MMbbl of storage capacity, five deepwater docks and seven barge docks) on the Houston Ship Channel. The SemGroup acquisition also provided ET with crude-gathering assets in the Denver-Julesburg (DJ) Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas, plus crude oil and NGL pipelines from the DJ to the Anadarko.
That was just the beginning. In December 2021, ET closed on the $7.2 billion acquisition of Enable Midstream, which further augmented the synergies ET had already achieved, particularly regarding NGL flows into its Mont Belvieu fractionation complex and its export facilities, as well as flows of natural gas through Louisiana’s central gas corridor to LNG and industrial demand along the Gulf Coast, where ET has planned to develop the Lake Charles LNG facility, despite recent setbacks. (See Better Together for details on the ET/Enable deal.)
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