Energy Transfer LP ET completed the previously announced acquisition of WTG Midstream Holdings LLC. The firm paid $2.28 billion in cash and nearly 50.8 million newly issued ET common units to complete the acquisition.
This acquisition expanded Energy Transfer’s presence in the Midland Basin as it added 6,000 miles of complementary gas-gathering pipelines in the region. The deal added eight gas processing plants with a total capacity of 1.3 billion cubic feet per day and two additional processing plants, which are under construction.
Benefits From Acquisition
The completion of the acquisition will provide incremental revenues to Energy Transfer from gathering and processing activities, along with downstream transportation and fractionation fees. The firm expects the WTG assets to add 4 cents of Distributable Cash Flow per common unit in 2025, increasing to around 7 cents per common unit in 2027.
Expanding Through Acquisition
Energy Transfer, apart from using organic methods to expand its operation, is making strategic acquisitions to expand. Last year, the firm acquired Crestwood Equity Partners LP. This acquisition allowed the firm to own and operate more than 125,000 miles of pipelines and related assets in all the major producing regions of the United States.
Other firms operating in the midstream space are also making acquisitions to expand operations. Antero Midstream Corporation AM completed a bolt-on acquisition of gathering and compression assets in the Marcellus Shale for $70 million from Summit Midstream Partners LP SMLP. The assets acquired in May 2024 include two compressor stations and 48 miles of high-pressure gas gathering pipelines. This acquisition is expected to be more than 5% accretive to the free cash flow after dividends through 2027.
Price Performance
In the past six months, the stock has gained 23.9% compared with the industry’s growth of 20.5%.
Image Source: Zacks Investment Research
Zacks Rank
Energy Transfer currently has Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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