Energy Transfer has agreed to acquire pipeline operator Lotus Midstream from an affiliate of EnCap Flatrock Midstream (EFM), in a cash-and-stock deal worth $1.45bn.
Under the agreement, Energy Transfer will make a cash payment of $900m and issue 44.5 million newly issued Energy Transfer shares.
Subject to regulatory approval and customary closing conditions, the transaction is scheduled to close in the second quarter of 2023.
Energy Transfer expects the acquisition to increase connectivity for its crude oil transportation and storage businesses.
Lotus Midstream owns and operates Centurion Pipeline Company, an integrated, crude oil logistics platform located in the Permian Basin. The company is engaged in providing a full suite of midstream services including intra-basin transportation, wellhead gathering, terminalling and long-hour transportation services.
With a capacity of nearly 1.5 million barrels per day, the expansive system covers about 3,000 miles of crude gathering and transportation pipelines, which extend from south-east New Mexico via the Permian Basin of West Texas to Cushing, Oklahoma.
With the acquisition, Energy Transfer’s storage capacity in Midland, Texas is expected to increase by nearly two million barrels.
In a press statement, Energy Transfer said: “The Centurion assets, located across some of the most active areas of the Permian Basin, provide significant gathering volumes from key producers while also enhancing Energy Transfer’s access to key downstream markets with consistent sources of demand.
“The assets provide direct access to major hubs, including Cushing, Midland, Colorado City, Wink and Crane. The system is anchored by large-cap producer customers with firm, long-term contracts, and significant acreage dedications.”
The deal also covers a 5% interest in the Wink to Webster Pipeline, a 650-mile crude oil pipeline system, which supplies over one million barrels per day of crude oil and condensate to the Gulf Coast from the Permian Basin.