Energy Transfer announced Tuesday it agreed to purchase private equity-funded WTG Midstream in a deal valued at $3.25 billion, expanding its natural gas pipeline and processing network in the Permian Basin.
The transaction consists of $2.45 billion in cash and about 50.8 million newly issued Energy Transfer common units. The acquisition is expected to close in the third quarter if it clears regulators.
WTG Midstream, which is backed by Stonepeak, the Davis Estate and Diamondback Energy Inc., owns eight gas processing plants with two more under construction and 6,000 miles of complementary gas gathering pipelines, Energy Transfer said.
It also holds a 20 percent interest in the BANGL NGL Pipeline, a joint venture between WTG, White Water, MPLX and Rattler which owns a natural gas liquids pipeline connecting the Permian Basin to Texas Gulf Coast markets.
Energy Transfer said the system is supported by high-quality customers with an average contract life of more than eight years.
RBC Capital Markets is financial advisor to Energy Transfer, whose general counsel is Jim Wright. Vinson & Elkins is its legal counsel with a team led by partner Lande Spottswood and senior associate Jordan Fossee with assistance from associates Matt Fiorillo, Patrick Reintjes and Waleed Vohra.
Other team members included partner Matt Dobbins, counsel Corinne Snow and associate Simon Willis (environmental); partner David D’Alessandro, counsel Melissa Spohn and associate Cassandra Zarate (executive compensation/benefits); partners Jackson O’Maley, Sarah Mitchell and associate Walt Baker (MACM); partners Gary Huffman and Ryan Carney, senior associate Miron Klimkowski and associate Patrick Darby (tax); and counsel Rajesh Patel and senior associate Alexa Chally (intellectual property).
Partner Sean Becker and associates Peter Goetschel and Ashley Plunk advised on employment/labor; partner Darren Tucker, counsel Ryan Will and associate Rami Rashmawi on antitrust; partners Bill Scherman, Jason Fleischer and counsel Mike Malenfant on energy regulatory; partner Caitlin Turner, senior associate Frank George and associate Sara Johnson on finance; and partner Courtney Hammond on real estate.
Jefferies is financial advisor to WTG and Sidley Austin is its legal counsel including partners Tim Chandler (Energy and Infrastructure), Jeremy Pettit (Energy and Infrastructure), Angela Richards (Tax), Alex Csordas (Capital Markets) and Justin Macke (Private Equity); Senior managing associates Jack Zeringue (M&A) and Chanse Barnes (Energy and Infrastructure); Managing associate Ellen Heighten (M&A) and associate Alex Thompson (Energy and Infrastructure).
Energy Transfer has been on an acquisition tear. Last year alone, the limited partnership purchased Crestwood Equity Partners for $7.1 billion (Kirkland & Ellis advised Energy Transfer while Vinson & Elkins assisted Crestwood) and EnCap’s Lotus Midstream for $1.45 billion (V&E advised Lotus while Sidley assisted Energy Transfer and Shearman & Sterling counseled EnCap).
The cash-and-equity deal structure is expected to provide strong equity returns while maintaining leverage target, Energy Transfer said. It anticipates distributable cash flow accretion from the transaction of 4 cents per common unit in 2025, increasing to 7 cents per unit in 2027.