Energy Transfer Acquires WTG Midstream for $3.3 Billion, Expanding Permian Basin Operations

In a significant move within the energy sector, U.S. pipeline giant Energy Transfer LP has announced an agreement to acquire WTG Midstream in a deal valued at approximately $3.25 billion. This acquisition reflects a growing trend among pipeline operators to expand through mergers and acquisitions due to the increasing difficulty of constructing new systems in many parts of the United States.

Energy Transfer will purchase the Midland, Texas-based WTG Midstream from affiliates of Stonepeak, the Davis Estate, and Diamondback Energy. The transaction involves a payment of $2.45 billion in cash and the issuance of around 50.8 million newly issued Energy Transfer common units.

WTG Midstream operates the largest private natural gas gathering and processing network in the Permian Basin, covering both Texas and New Mexico. This acquisition will grant Energy Transfer enhanced access to the most productive shale region in the U.S., further solidifying its presence in the Permian Basin.

The extensive pipeline network of WTG Midstream spans 6,000 miles and services some of the most active regions of the Permian’s Midland Basin, including Martin, Howard, Upton, Reagan, and Irion counties. The company also manages eight processing plants with a combined capacity of approximately 1.3 billion cubic feet per day.

Additionally, WTG Midstream is constructing two new processing plants that will add a further 0.4 billion cubic feet per day in capacity. The first of these plants is scheduled to be operational by the third quarter of 2024, with the second plant expected to be completed by the third quarter of 2025.

The acquisition is set to close in the third quarter of this year, pending regulatory approvals and customary closing conditions. Following the announcement, shares of Energy Transfer saw a slight increase of 0.5% in pre-market trading in New York.

This strategic purchase underscores the ongoing consolidation within the pipeline industry as companies seek to bolster their infrastructure and capabilities in a challenging regulatory environment.