Energy Transfer LP announced on Monday that it had acquired pipeline operator Lotus Midstream in a $1.45 billion cash-and-stock deal to boost its presence in the Permian Basin.
The acquisition is expected to solidify Energy Transfer as one of the top midstream companies in the region and provide greater access to crucial markets for both producers and consumers.
The acquisition includes Lotus Midstream's Centurion Pipeline assets, giving Energy Transfer access to more than 1,000 miles of pipelines and related infrastructure in West Texas. This will allow Energy Transfer to increase its capacity for transporting crude oil, natural gas liquids (NGLs), and other hydrocarbons from production sites in the Permian Basin to refining centers along the Gulf Coast.
The deal also includes an agreement with Plains All American Pipeline LP (PAA) that will allow Energy Transfer access to PAA's existing network of pipelines and storage facilities in the region. This agreement is expected to significantly expand Energy Transfer's presence in the Permian Basin by providing additional transportation options for producers and consumers alike.
In addition, Energy Transfer has agreed to acquire a 50% interest in certain NGL processing assets owned by Lotus Midstream. These assets include fractionation plants located near Odessa, Texas, capable of processing up to 40,000 barrels per day (bpd) of NGLs into ethane, propane, butane, and other products used by petrochemical manufacturers.
The acquisition is part of Energy Transfer's ongoing strategy of expanding its presence in the Permian Basin and increasing its market share in key markets such as crude oil transportation and NGL processing. The company has already made significant investments in infrastructure projects throughout the region over the past few years, including a $2 billion expansion project at its Eagle Ford facility that was completed last year.
Energy Transfer CEO Kelcy Warren said this acquisition "will further strengthen our position as one of the leading midstream companies operating within the Permian Basin."
He added that "the combination of these assets with our existing footprint creates a powerful platform for continued growth."
With this latest acquisition, Energy Transfer continues its commitment to providing reliable energy transportation services throughout the region while also expanding its presence in key markets such as crude oil transportation and NGL processing.
By Michael Kern for Oilprice.com
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