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Energy Transfer LP has signed a definitive agreement to buy SemGroup Corporation in a cash and stock transaction valued at US$5 billion including SemGroup’s debt—a deal expected to boost Energy Transfer’s crude oil and NGL transportation connectivity.
The deal, expected to close late this year or early next year, is pending the approval by SemGroup’s stockholders and other customary regulatory approvals.
“Energy Transfer will significantly strengthen its crude oil transportation, terminalling and export capabilities with the addition of the Houston Fuel Oil Terminal (HFOTCO), a world class crude oil terminal on the Houston Ship Channel with 18.2 million barrels of crude oil storage capacity, five deep-water ship docks and seven barge docks,” the company said, commenting on the value that SemGroup’s assets could bring to its business.
In order to further boost crude oil and NGL connectivity in Texas, Energy Transfer also announced plans to build a new crude oil pipeline, the Ted Collins Pipeline, to connect HFOTCO to Energy Transfer’s Nederland Terminal.
Thanks to the acquisition of SemGroup, Energy Transfer will expand its crude oil and NGL infrastructure by adding crude oil gathering assets in the DJ Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas, as well as crude oil and NGL pipelines connecting the DJ Basin and Anadarko Basin with crude oil terminals in Cushing, Oklahoma.
Those assets complement Energy Transfer’s existing crude oil and NGL transportation business in the Permian Basin.
The acquisition will also provide a significant crude oil gathering and transportation presence in the Alberta Basin in western Canada, according to Energy Transfer.
Midstream companies, including Energy Transfer, are rushing to complete and place into service more pipelines to take advantage of the bottlenecks between the Permian and the U.S. Gulf Coast.
Energy Transfer is currently expanding the Permian Express 4 pipeline, and it expects to have the project—which adds 120,000 bpd of capacity from the Permian to Gulf Coast markets—in-service by the end of the third quarter of 2019, the company said last month.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.