Title: Energy Transfer Bolsters Position in Permian Basin with $3.3 Billion Acquisition of WTG Midstream

Energy Transfer, the leading midstream giant, is making waves in the industry once again with its latest acquisition of WTG Midstream in a highly accretive deal worth approximately $3.3 billion. The move is set to strengthen Energy Transfer's position in the coveted Permian Basin and drive visible near-term growth with long-term expansion potential.

This strategic acquisition perfectly aligns with Energy Transfer's acquisition strategy, focusing on accretive transactions that enhance its value chain without negatively impacting its balance sheet. The company's approach has been consistently rewarding for investors, with its high-yielding distribution currently standing at over 8%.

Under the terms of the deal, Energy Transfer will pay roughly $2.5 billion in cash and 50.8 million units. This deal structure ensures strong equity returns while allowing the company to maintain its targeted leverage ratio. Expected to close in the third quarter, the acquisition will boost Energy Transfer's distributable cash flow per unit by $0.04 per share in 2025 and increase to $0.07 per unit by 2027.

WTG Midstream is an ideal fit for Energy Transfer, as it will enhance and expand the company's gathering and processing capabilities in the Permian Basin. With 6,000 miles of gas-gathering pipelines in the Midland Basin side of the Permian, WTG Midstream also operates eight natural gas processing plants with a capacity of 1.3 billion cubic feet per day (Bcf/d) and a 20% ownership interest in the BANGL natural gas liquids (NGL) pipeline. These highly complementary assets are backed by long-term contracts with high-quality customers.

In addition to the existing assets, WTG Midstream is currently building two natural gas processing plants, which will add an additional capacity of 0.4 Bcf/d. The first plant is expected to come online in the third quarter of 2024, followed by the second plant in the third quarter of 2025. Moreover, the joint venture partners who own the BANGL pipeline are expanding its capacity from 125,000 barrels per day (BPD) to 200,000 BPD, with potential further expansion to over 300,000 BPD. These expansion projects will provide incremental revenue for Energy Transfer while boosting volumes and fees for its downstream assets.

Energy Transfer sees significant growth opportunities stemming from the acquisition. As production in the Midland Basin increases, the company can further expand its gathering pipelines and processing plants. The uptick in upstream volumes could also drive downstream expansion, including additional pipeline expansions, new NGL fractionation capacity, and increased export capacity. These factors contribute to Energy Transfer's expectation of growing distributable cash flow per share in the coming years.

This growing cash flow will support Energy Transfer's plans to increase its distribution, with the aim of raising the payout by $0.0025 per unit each quarter, equivalent to a $0.01 annual increase. The WTG Midstream deal alone has the potential to fuel distribution growth for several years, allowing the company to accelerate its rate towards the higher end of the 3% to 5% annual target range. Over the past year, Energy Transfer delivered a 3.3% increase in its distribution.

Energy Transfer continues to pursue highly accretive acquisitions that strengthen its value chain, enabling the company to grow its cash flow per share and offer an attractive option for income-seeking investors. With the WTG Midstream acquisition, Energy Transfer solidifies its position in the Permian Basin and secures visible growth opportunities for the foreseeable future.