Energy Transfer to Buy Permian Operator WTG for $3.3 Billion

Pipeline Operators Have Been Increasingly Turning to Buying Competitors
Energy Transfer pipeline
Sections of pipe at an Energy Transfer Partners LP construction site for a natural gas liquids pipeline. (Charles Mostoller/Bloomberg News)

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U.S. pipeline giant Energy Transfer LP has reached a deal to buy WTG Midstream through a deal valued at about $3.25 billion.

Energy Transfer will buy the Midland, Texas-based company from affiliates of Stonepeak, the Davis Estate and Diamondback Energy, according to a statement May 28. It will pay $2.45 billion in cash and about 50.8 million newly issued Energy Transfer common units.

Pipeline operators have been increasingly turning to buying their competitors to grow as it has become nearly impossible to build new systems in many areas of the U.S.

WTG Midstream runs the largest private natural gas gathering and processing business in the Permian Basin of Texas and New Mexico, giving Energy Transfer deeper access into the most prolific shale patch in the U.S.

The company’s pipeline network spans 6,000 miles and serves some of the most active areas of the Permian’s Midland Basin including in Martin, Howard, Upton, Reagan and Irion counties. WTG also operates eight processing plants with a total capacity of approximately 1.3 billion cubic feet per day.

It is building two new ones with an additional capacity of approximately 0.4 billion cubic feet per day. The first is expected to be in service in the third quarter of 2024, and the second plant is scheduled to be up and running in the third quarter of 2025.

The deal is expected to close in the third quarter. Shares of Energy Transfer rose 0.5% before the start of regular trading in New York.

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