Energy Transfer to Acquire WTG Midstream for $3.25B

Energy Transfer LP is acquiring WTG Midstream Holdings LLC in a transaction valued at approximately $3.25 billion

The partnership said in a news release that the transaction’s consideration will consist of $2.45 billion in cash and approximately 50.8 million newly issued Energy Transfer common units. Subject to regulatory approval and customary closing conditions, the transaction is expected to close in the third quarter.

WTG provides comprehensive midstream services, including wellhead gathering, intra-basin transportation, and processing services. According to the release, the company’s 6,000-mile pipeline network serves significant operators in some of the most active areas of the Midland Basin, including 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 (Bcfpd) and is constructing two new plants with an additional capacity of approximately 0.4 Bcfpd. The first new plant is expected to be in service in the third quarter and the second plant in the third quarter of 2025.

WTG’s extensive system processes significant volumes from large cap investment grade producers with firm, long-term contracts and acreage dedications, Energy Transfer said, adding that the assets will provide it with increased access to growing supplies of natural gas and natural gas liquids (NGL) volumes, enhancing the partnership’s Permian operations and downstream businesses.

The acquisition also includes a 20 percent interest in BANGL Pipeline, an approximately 425-mile NGL pipeline with an initial capacity of 125,000 barrels per day (bpd), expandable up to 300,000 bpd. The pipeline connects the Permian Basin to markets on the Texas Gulf Coast.

Energy Transfer said the acquisition is expected to provide “future upside” as the basin continues to develop on and around its infrastructure. The transaction is expected to increasingly add incremental revenue from downstream NGL transportation and fractionation fees.

Energy Transfer expects the WTG Midstream assets to add approximately $0.04 of Distributable Cash Flow (DCF) per common unit in 2025, growing to approximately $0.07 per common unit in 2027. WTG’s cash flows are supported by a high-quality customer base, predominantly investment grade, with an average contract life of more than eight years.

According to Diamondback Energy, the transaction will result in total pre-tax consideration net to Diamondback of approximately $375 million, subject to customary closing conditions and adjustments.

“We would like to congratulate Stonepeak and the WTG Midstream team on this fantastic outcome,” Diamondback Chairman and CEO Travis Stice said. “Not only has our partnership generated an outsized economic return, but WTG’s gas gathering and processing system continues to support Diamondback’s substantial activity on our dedicated acreage. We are excited to further expand our relationship with Energy Transfer and expect a smooth operational transition”.

Energy Transfer owns and operates one of the largest and most diversified portfolios of energy assets in the USA, with more than 125,000 miles of pipeline and associated energy infrastructure. Its strategic network spans 44 states and includes assets in all of the major U.S. production basins.

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas, focused on the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

To contact the author, email rocky.teodoro@rigzone.com

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