Energy Transfer to buy WTG Midstream for $3.25bn

US midstream company Energy Transfer has agreed to buy WTG Midstream for $3.25bn, expanding its foothold in natural gas transportation in the Permian basin.

The cash-and-stock acquisition includes eight gas processing plants with 1.3 Bcf/d (37mn m3/d) of capacity, as well as two plants under construction with 400mn cf/d of capacity. It also includes more than 6,000 miles of gas gathering lines and a 20pc interest in the 125,000 b/d BANGL natural gas liquids pipeline, which is expandable to over 300,000 b/d, the companies said.

Energy Transfer agreed to buy privately held WTG for $2.45bn cash plus about $800mn of Energy Transfer stock.

Energy Transfer earlier this month said it was "very optimistic" that its 1.5-2 Bcf/d Warrior natural gas pipeline would be next in line to be built out of west Texas after the planned 2.5 Bcf/d Matterhorn Express gas line enters service this year. Spot gas prices near the Permian have spent much of the last two months in negative territory as crude-focused production has flooded the market with associated gas, for which there is insufficient pipeline infrastructure to ship to more distant customers.

The latest acquisition comes amid a frenzy of deal activity in the US oil and gas industry over the past year, especially in the Permian basin, as oil producers there look to secure high-quality inventory. Among North American midstream companies, Energy Transfer's rival Williams in December agreed to buy gas storage assets near the US Gulf coast for $1.95bn, and US gas producer EQT in March agreed to buy Mountain Valley Pipeline developer Equitrans Midstream in a $5.5bn deal.

Energy Transfer and WTG expect the transaction to close in the third quarter of this year.

By Julian Hast