Energy Transfer (ET) agreed to acquire Vaquero Midstream for $2.625B, a premium price that implies fees above any Delaware Basin G&P peer. The deal only works if ET can capture the downstream value from Vaquero’s natural gas and NGLs on its own network – and securing those barrels is increasingly important as competition for Permian NGL supply intensifies.
The Vaquero system gathers gas from wells in Reeves, Loving, Winkler, Ward and Pecos counties in West Texas (see asset map from Energy Data Studio). Vaquero’s Caymus complex in Pecos County runs ~500 MMcf/d vs 675 MMcf/d of processing capacity across three trains. At 7–10x EBITDA, East Daley Analytics estimates the purchase price implies all-in fees of $1.84–2.45/Mcf at current volumes, or $1.47–1.92/Mcf at full plant utilization (see table at right).
The richest fee-based Delaware systems East Daley models, owned by ONEOK (OKE) and Western Midstream (WES), earn $1.27–1.34/Mcf. At those fees, the Vaquero purchase price implies ~11–12x EBITDA for a full plant and ~15–16x on today’s volumes.
Energy Transfer is also buying meaningful growth optionality. Vaquero owns sufficient acreage to add two processing trains at Caymus, potentially increasing capacity from 675 MMcf/d to ~1.2 Bcf/d
The Vaquero system is supported by ~100,000 dedicated acres and customer contracts with an average remaining life of ~10 years. Even with that upside, the purchase price appears to require meaningful value capture beyond standalone gathering and processing fees.
Sweet Gas Earns No Premium
Vaquero’s gas quality doesn’t explain the premium. Acquirers having been paying higher multiples for sour gas systems in the Delaware, but Vaquero gathers relatively sweet gas. Filings with the Texas Commission on Environmental Quality (TCEQ) show hydrogen sulfide content of 8 ppm or less and 0.33% CO2 content at the Caymus plant inlet, and Vaquero operates no acid gas injection wells. The NGL content is middle of the pack at ~5.3 gal/Mcf.
That leaves the downstream systems. The value has to come from the NGLs, residue gas and export volumes that ET can move through its own pipelines, fractionators and docks.
Energy Transfer made that strategy explicit in announcing the transaction, highlighting Vaquero’s growing system volumes and the incremental revenue opportunities from pipeline transportation, fractionation, terminaling and exports.
ET Needs the NGL Barrels
Vaquero may be just as important as a defensive play for Energy Transfer’s NGL business.
Competition to control Permian NGL supply is intensifying. In August, Targa Resources (TRGP) signed new 20-year agreements with ExxonMobil (XOM) covering integrated gathering, processing and downstream services across the Permian. The agreements include 20-year NGL transportation and fractionation dedications associated with ExxonMobil acreage across both the Delaware and Midland basins.
ET also faces potential exposure as legacy Kinetik (KNTK) NGL contracts approach expiration. East Daley previously estimated ~75 Mb/d of contracted NGLs could ultimately roll off ET’s systems by YE26. That estimate is directional: The volumes currently delivered under the contracts is unclear, and the expiration date of one of the NGL purchase agreements remains the subject of litigation between Kinetik and ET.
Vaquero provides ET with a meaningful new source of liquids supply against that backdrop. At ~500 MMcf/d of inlet volumes and ~5.3 gal/Mcf of liquids content, Vaquero’s gas contains roughly 63 Mb/d of gross NGL content. At Caymus’ full 675 MMcf/d capacity, that rises to ~85 Mb/d before accounting for recovery rates and ethane rejection.
On a gross liquids-content basis, Vaquero is therefore directionally similar in scale to the potential Kinetik volume exposure. It is not a barrel-for-barrel replacement, but it illustrates why control of Vaquero’s molecules could have value to ET well beyond plant-level G&P margins.
That matters as ET expands its downstream system. In 2Q26, ET completed upgrades that added more than 90 Mb/d of incremental Permian takeaway capacity on Lone Star Express, and signed long-term transportation and/or fractionation agreements covering ~300 Mb/d of Y-grade volumes. ET is also expanding export capacity at its Nederland terminal by 240 Mb/d for ethane and 55 Mb/d for LPGs.
The Vaquero premium therefore may reflect more than incremental downstream margin. The acquisition gives ET greater control over Permian barrels that can feed Lone Star, Mont Belvieu fractionation and its growing Gulf Coast export footprint at a time when competitors are securing long-lived supply.
TRP’s Buyer Will Set Vaquero’s Growth
Two private producers supply over half of Vaquero’s gas. Railroad Commission of Texas gatherer filings show Petro-Hunt delivered ~32% of the system’s gas in June and TRP Energy ~22%, followed by CPX Energy at ~10%.
TRP also drilled ~60% of Vaquero’s 2026 wells. Hart Energy reported in June that TRP is exploring a ~$3B sale of its Permian assets. Rigs on the system already fell from 5 to 3 in late September. The identity and drilling plans of TRP’s eventual buyer could therefore have an outsized impact on how quickly ET fills Caymus – and how many additional NGL barrels reach its downstream assets.
Stronger Waha Prices Add Upside
East Daley expects stronger Waha prices to return gas production curtailed this spring and pull rigs toward gassier zones. Continental Resources started drilling in the Woodford formation near Vaquero’s system in July. Continental’s Delaware Woodford wells post median initial rates near 11 MMcf/d, more than 3x the ~3.5 MMcf/d East Daley assumes for Vaquero’s wells. That upside sits outside our base forecast. Given recent Permian pipeline announcements such as the Solitude system (4.5 Bcf/d), these gassier plays provide more value as Waha constraints ease, and Waha moves towards Henry Hub in outright price.
Bottom Line: Vaquero’s G&P fees alone don’t support a $2.625B valuation. ET is paying for control of the molecules and barrels Vaquero can feed into its broader network.
The acquisition is both offensive and defensive. ET gets incremental G&P EBITDA and meaningful expansion optionality, but the strategic prize is securing Permian gas and NGL volumes that can generate additional transportation, fractionation, terminaling and export revenue across its downstream system.
Without sustained drilling and full downstream capture, Vaquero’s standalone fees struggle to carry a $2.625B valuation. With those molecules moving through ET’s entire value chain, the math starts to look different. – Jaxson Fryer Tickers: ET, KNTK, OKE, TRGP, WES, XOM.
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