On March 31, Abu Dhabi-based 2PointZero entered a deal to acquire Traverse Midstream for $2.25B, paying a premium price for a foothold in the US midstream space.
Traverse’s portfolio includes a 35% stake in Rover Pipeline and a 25% stake in the Ohio River System (ORS), a dry gas gathering system in southeastern Ohio. East Daley Analytics’ financial models estimate that Rover contributed ~$165MM in net EBITDA to Traverse in 2025, while ORS provided ~$35MM in EBITDA. At total estimated 2025 EBITDA of ~$200MM, the deal values the assets at a 11.3x multiple.
The 11.3x multiple for Traverse screens as elevated compared to recent pipeline transactions (see figure above). Moreover, 18% of Traverse’s cash flow comes from ORS, a gathering header. Gathering assets typically don’t carry as robust a multiple as interstate pipelines.
In East Daley’s view, the Traverse assets lack a robust growth story that would justify a peer-leading underwriting value. Rover is a high-quality asset carrying Appalachian gas, but the pipeline doesn’t connect directly to a premium Midwest market like Chicago. The Dawn hub is the end-market for Rover, and current rates on pipeline contracts to Dawn have mark-to-market risk upon re-contracting that could lower pipeline revenues.
Clients can review details on Rover Pipeline in the ‘Gas Pipeline Customer Contracts’ dashboard in Energy Data Studio (see figure above). The pipeline has stable contracting until 2033, when ~1.3 Bcf/d of firm contracts are set to expire. We see potential re-contracting risk tied to basis differentials between Eastern Gas Transmission South in Appalachia and Dawn. East Daley estimates this exposure represents ~$70MM of annual revenue risk, or ~9% of current revenues, reinforcing some rate uncertainty for the asset.
Compare the Traverse deal to a transaction like ArcLight’s 2025 purchase of a 25% stake in Natural Gas Pipeline Company of America (NGPL) at an 11.0x multiple. NGPL is a FERC-regulated pipeline that spans multiple production regions in the Permian, Midcontinent and Eagle Ford and connects directly into the premium Chicago market. The NGPL asset carries less risk and has better market connectivity, and does not include a gathering component.
The 2PointZero transaction is either a bad deal – a case of a new player overpaying for assets – or a step-change in the valuation of US energy infrastructure. In the latter case, the market needs to adjust its willingness to pay to participate in transactions.
For more information on energy asset valuations, reach out to East Daley Consulting. – Zach Krause.
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