Over the past four years, Energy Transfer (ET) has made a number of significant acquisitions, all of which are intended to give the company the additional size and reach it will need to compete in an increasingly consolidated midstream sector. On Wednesday, ET announced one of its largest purchases to date: a $7.1 billion deal to acquire Crestwood Equity Partners, which has extensive gathering and processing assets in the Permian, Powder River and Williston basins, as well as terminals and NGL storage facilities east of the Mississippi. In today’s RBN blog, we look at how the addition of the Crestwood holdings will expand ET’s value chain and complement its fractionation assets at Mont Belvieu and its export capabilities at both its Nederland terminals as in Marcus Hook.
Dallas-based Energy Transfer has long been on a M&A spree, and the large blocks of processing plants, pipelines and other intermediate assets it has been acquiring have been merged into what looks like a very logical We’ll get to ET’s general plan in a moment.
We’ll start with the details of the Crestwood deal, which calls for ET to acquire the smaller mid-sized company for about $3.8 billion in ET stock and the assumption of $3.3 billion in debt. In the Williston Basin (also known as the Bakken) in western North Dakota (map left in Figure 1), Crestwood, a master limited partnership (MLP), owns the Arrow gathering systems and Rough Rider, which together have the capacity to gather up to 250 Mb/d of crude oil, 420 MMcf/d of natural gas and 420 Mb/d of produced water. It also owns four gas processing plants with a combined capacity of 430 MMcf/d the COLT Hub, which has 1.2 MMbbl of crude oil storage capacity and the ability to load up to 160 Mb/d into tank cars.
