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Massive Energy Deal Alert: Energy Transfer to Acquire Lotus Midstream in Permian Basin for $1.45 Billion!04/13/2023
Energy Transfer's recent acquisition of Lotus Midstream's infrastructure for $1.45 billion is a remarkable feat that is bound to shake up the energy industry.
This strategic move grants Energy Transfer access to the highly prized Centurion Pipeline, as well as an additional 3,000 miles of crude gathering and transportation pipelines. These pipelines span across the vast Permian Basin of West Texas, stretching all the way from New Mexico and culminating at the bustling energy hub of Cushing, Oklahoma.
In a major move that has set the energy industry abuzz, Energy Transfer LP has announced its acquisition of Lotus Midstream LLC for a staggering $1.45 billion in cash-and-stock. This game-changing deal includes a vast network of pipelines, gathering, and storage facilities spanning the Permian Basin, and opens up new avenues for a connecting crude oil pipeline project from Midland to Cushing, Oklahoma.
The acquisition, from an affiliate of EnCap Flatrock Midstream (EFM), is just the latest in a series of midstream deals worth billions of dollars that have dominated the industry since late last year. From smaller bolt-on deals to multi-billion-dollar transactions like Enterprise Products Partners' acquisition of Navitas and Targa's acquisition of Lucid Energy, the sector is experiencing a flurry of activity that is showing no signs of slowing down.
According to Stacey Morris, head of energy research for VettaFi, "Energy Transfer's acquisition of Lotus is another example of a sizable acquisition of Permian assets, though this deal is different in that the assets are focused on crude gathering and transportation instead of natural gas."
Why the Permian Basin is so significant for O&G players?
The Permian Basin continues to be a hotbed of deal-making activity as midstream companies seek to bolster their positions in the most prolific producing region in the United States. With fierce competition in the region, expanding footprints and establishing enhanced connectivity to different markets is crucial for midstream companies looking to improve their offerings and transportation solutions for customers.
By acquiring new infrastructure and expanding their networks, midstream companies can provide more efficient and cost-effective transportation solutions for producers, leading to increased competitiveness and profitability for all parties involved. As such, the Permian Basin remains a highly attractive area for deal-making, with companies seeking to gain a competitive edge in this dynamic and rapidly evolving market.
In total, Energy Transfer will pay $900 million in cash and approximately 44.5 million newly issued Energy Transfer common units, solidifying its position as a leading player in the energy sector and paving the way for a bold new chapter in its history.
Sneak peek at the details
- The deal includes approximately 3,000 active miles of pipeline with nearly 1.5 MMbbl/d of capacity, connecting major production areas of the Permian Basin, 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.
- As part of the acquisition, Energy Transfer also gains a 5% equity interest in the Wink to Webster Pipeline, a 650-mile pipeline system transporting over 1 MMbbl/d of crude oil and condensate from the Permian Basin to the Gulf Coast.
- Energy Transfer plans to begin construction on a 30-mile pipeline project, originating barrels from its Midland terminals for ultimate delivery to Cushing.
- The project is expected to be completed in Q1 2024, offering improved connectivity and efficiency for Energy Transfer and its customers.
Energy Transfer's latest acquisition deal is set to close in Q2, bringing Lotus Midstream's Centurion Pipeline Company under its umbrella. The integrated crude midstream platform, located in the Permian, offers a comprehensive range of services, including wellhead gathering, intra-basin transportation, terminalling, and long-haul transportation services.
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Riley Permian Secures $330 Million Acquisition in Thriving New Mexico: A Strategic Move with Promising Returns
In a big move for Riley Permian, the company has just closed a deal to acquire top-of-the-line oil and gas assets in the heart of New Mexico. The acquisition, which was made in February, saw Riley Permian snapping up these highly sought-after resources from none other than Pecos Oil & Gas LLC for $330 million.
Exploring the Energy Lifeline: A Tour of Williston Basin's Midstream Infrastructure
The Williston Basin, which spans parts of North Dakota, Montana, Saskatchewan, and Manitoba, is a major oil-producing region in North America. In order to transport crude oil and natural gas from the wells to refineries and other destinations, a vast pipeline infrastructure has been built in the area. The pipeline infrastructure in the Williston Basin consists of a network of pipelines that connect production sites to processing facilities, storage tanks, and major pipeline hubs
Global oil supply and demand saw notable changes in April 2023. Liquids demand declined by 0.7 MMb/d to 99.9 MMb/d, with gains in China and Europe offset by reduced demand in Japan and the Middle East. OPEC 10 production remained stable at 29.5 MMb/d, while Saudi Arabia increased output by 0.3 MMb/d. Non-OPEC production declined slightly, Russian production dropped further, and US shale production remained steady. Combined production in Iran, Venezuela, and Libya remained unchanged. Commercial inventories increased, and OPEC+ implemented production cuts. Economic sentiment remains uncertain amid rising global inflation.
ONEOK Inc. and Magellan Midstream Partners LP have announced a merger agreement that will result in the formation of a formidable midstream company headquartered in Tulsa, Oklahoma. The deal will bring together their respective assets and expertise, resulting in a powerful entity boasting an extensive network of approximately 25,000 miles of pipelines primarily focused on transporting liquids.
Callon Acquires $1.1 Billion Delaware Assets and Bows Out of Eagle Ford - Here's What You Need to Know
Callon is set to purchase Percussion Petroleum's Delaware assets for $475 million while selling its Eagle Ford assets to Ridgemar for $655 million. In a strategic step to optimize its operations, Callon Petroleum recently made headlines by sealing two deals on May 3, totaling a staggering $1.13 billion. The company is taking confident steps to bolster its presence in the Delaware Basin while bidding farewell to its stake in the Eagle Ford Shale.