Energy Transfer to Buy WTG Midstream for $3.25B

Energy Transfer’s massive national natural gas pipeline infrastructure just got bigger, as the Dallas-based company agreed to buy WTG Midstream, LLC’s processing network in the Permian Basin for about $3.25 billion in cash and stock.

Energy Transfer will acquire the Midland, TX-based company from Stonepeak, Davis Estate, and Diamondback Energy affiliates. It will pay $2.45 billion in cash and approximately 50.8 million newly issued Energy Transfer common units. The transaction also includes a 20% stake in the BANGL Pipeline, which connects the Permian Basin to markets along the Texas Gulf Coast.

Energy Transfer’s acquisition, which is slated for completion in the third quarter of 2024, will add over 6,000 miles of gas collection pipelines and eight gas processing units, with two more under construction.

The addition of WTG assets is expected to provide expanded access to rising supplies of natural gas and natural gas liquids volumes, benefiting the company’s Permian Basin operations and downstream businesses.

Energy Transfer expects the WTG assets to add approximately $0.04 of distributable cash flow per common unit in 2025, growing to approximately $0.07 per common unit in 2027.

The transaction strengthens Energy Transfer’s pipeline system, which was expanded three years ago when the company purchased Oklahoma City-based Enable Midstream Partners from OGE Energy Corp. and CenterPoint Energy, Inc.

The WTG deal comes just a few months after Diamondback announced its $26 billion acquisition of Endeavor Energy Resources LP, which reportedly made Diamondback the Permian Basin’s third-largest producer, trailing only Exxon Mobil Corp and Chevron Corp.

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