Energy Transfer completes $7.1bn acquisition of Crestwood Equity Partners

Energy Transfer has officially completed the acquisition of American midstream operator Crestwood Equity Partners, a transaction valued at $7.1 billion. This strategic move not only expands Energy Transfer’s footprint in the Delaware and Williston basins but also marks its entry into the Powder River basin. Based on Crestwood’s closing price as of August 15, 2023, the deal includes the assumption of $3.3 billion in debt.

Approval and Closure of the Crestwood Deal

Following the unanimous approval by Crestwood’s unitholders in late October 2023, the all-stock transaction resulted in the cessation of Crestwood’s common and preferred units trading on the New York Stock Exchange. Initially announced in August 2023, the acquisition terms dictated that Crestwood’s unitholders would exchange each of their shares for 2.07 of Energy Transfer’s common units, ultimately granting them approximately 6.5% ownership in the expanded entity.

Enhanced Operations and Infrastructure

With the deal’s completion, Energy Transfer now oversees a vast network encompassing approximately 201,168 kilometers of pipelines and related assets across 41 states. The integrated assets will significantly enhance Energy Transfer’s existing capacity, with Crestwood’s impressive gas gathering capacity of nearly two billion cubic feet per day, a gas processing capacity of 1.4 bcf/day, and a crude gathering capacity of 340,000 barrels per day.

Strategic Asset Integration

The acquisition is set to fortify Energy Transfer’s current operations, particularly in downstream fractionation in Mont Belvieu and its capacity to export hydrocarbons via the Nederland Terminal in Texas and the Marcus Hook Terminal in Pennsylvania. Additionally, strategically located storage and terminal assets are part of the transaction, encompassing nearly 10 million barrels of storage capacity, as well as trucking and rail terminals, further solidifying Energy Transfer’s market position.

Financial and Operational Synergies

Energy Transfer anticipates the transaction will be immediately accretive to its distributable cash flow per unit. “The transaction… adds significant cash flows from firm, long-term contracts and significant acreage dedications,” stated Energy Transfer. The merger is also expected to bring forth annual run-rate cost and efficiency synergies of at least $40 million, not accounting for the additional financial and commercial synergies projected to follow.