Energy Transfer (ET) has made a statement acquisition, reaching a deal to acquire West Texas Gas Midstream (WTG) for $3.25B ($2.45B in cash). WTG, the largest private midstream operator remaining in the Permian Basin, will nearly triple ET’s Midland gas processing capacity from ~800 MMcf/d to 2.5 Bcf/d.
ET announced the acquisition last Tuesday (May 28). WTG operates 1.3 Bcf/d of processing plant capacity in the core of the Midland and serves strong counterparties like Exxon/Pioneer (XOM) and Diamondback/Endeavor (FANG). The ET/WTG deal follows the recent purchases of Pinnacle Midstream and Durango Midstream by Phillips 66 (PSX) and Kinetik (KNTK).
East Daley Analytics tracks ET and WTG’s G&P assets in Energy Data Studio. We currently estimate ~23 rigs across WTG’s systems vs ~8 rigs on ET’s Midland system. XOM and Endeavor are also big drillers on ET - Midland.
The figure shows the combined G&P assets of WTG and ET – Midland in Energy Data Studio. The acquisition will add much-needed capacity for ET in the basin. We estimate the company has been fully utilizing its 800 MMcf/d of processing capacity in the Midland while offloading gas to its Delaware system via the Permian Bridge project, completed in 2021.
The bigger benefit to ET might be in capturing the NGLs processed by WTG and sending them through its Lone Star pipeline, Mont Belvieu fractionators, and Nederland export facilities. We expect WTG can access all major NGL egress pipes in the Permian, including ET’s pipelines, but its newest facilities are likely dedicated to BANGL given it owns a 20% stake in the project. However, the legacy NGLs could be up for grabs. Plant data indicates WTG produced north of 150 Mb/d as of February 2024.
WTG was the largest private G&P system left in the Permian. ET’s main competitors in the basin and the broader NGL space, Enterprise Products (EPD) and Targa Resources (TRGP), made similar transactions in 2022 for Navitas and Lucid Midstream. Since then, the companies have added (and continue to add) a combined 4.1 Bcf/d of processing capacity, 1 MMb/d of NGL egress capacity, 700 Mb/d of fractionation capacity, and 350+ Mb/d of export capacity.
The strategic rationale and future commercial opportunities for the WTG deal are clear given the EPD/Navitas and TRGP/Lucid deals, but now it’s time for ET to execute. On that front, the company has successfully integrated and expanded the Enable and Lotus Midstream acquisitions. We expect it can continue to do so with WTG. – Ajay Bakshani, CFA Tickers: EPD, ET, FANG, KNTK, PSX, TRGP, XOM.
New Product: EDA’s LNG Stack
East Daley has added the new LNG Stack to our monthly gas Macro report and data set. The LNG Stack connects LNG export demand to producers through pipelines and processing, for a comprehensive view of the market. Build our LNG data into your own demand forecasts, or use it to validate against your own view of the coming LNG super-build. Learn more about the LNG Stack and Macro.
Sign Up for the Crude Oil Edge
East Daley’s Crude Oil Edge provides weekly updates on the US crude oil market including supply and demand fundamentals, basin-level views, and analysis of market constraints and infrastructure proposals. We explore sub-basin dynamics and provide market insights on crude oil flows, production growth, and import and export characteristics. Sign up now for the Crude Oil Edge.
Energy Data Studio
East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.
Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.
Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact insight@eastdaley.com.
The Daley Note
Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.