Energy Transfer has agreed to acquire WTG Midstream in a deal worth approximately $3.25bn from affiliates of Stonepeak, the Davis Estate and Diamondback Energy.  

The deal consideration includes a cash payment of $2.45bn and the issuance of around 50.8 million Energy Transfer new common units to the sellers.

Diamondback Energy, which currently owns a 25% stake in WTG, will receive about $375m upon completion of the deal.

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.”

WTG is engaged in providing midstream services including wellhead gathering, intra-basin transportation and processing services.

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The company, through its pipeline network that spans a 6,000-mile, caters to major operators in the Martin, Howard, Reagan, Upton, and Irion counties in the Midland Basin.

WTG Midstream also manages eight processing plants and is in the process of constructing two new plants.

Energy Transfer expects the WTG’s pipeline network and processing plants to bolster its access to natural gas and NGL volumes, while reinforcing its Permian operations and downstream businesses.

The acquisition also grants Energy Transfer a 20% interest in the BANGL Pipeline, enhancing connectivity between the Permian Basin and Texas Gulf Coast markets.

Subject to regulatory approval and customary closing conditions, the deal is expected to close in the third quarter of 2024.

RBC Capital Markets is advising Energy Transfer on the transaction while Vinson & Elkins is serving as legal counsel.

Jefferies is serving as financial advisor to WTG Midstream on the transaction. Sidley Austin is the legal counsel.