Energy Transfer to Acquire Lotus Midstream for $1.5 Billion, Adding 3,000 Miles of Permian Pipeline

(Reuters) — Energy Transfer LP said on Monday that it would acquire pipeline operator Lotus Midstream in a $1.45 billion cash-and-stock deal to boost its pipeline portfolio in the U.S. Permian basin.

Energy Transfer said it will pay $900 million in cash and the rest in 44.5 million newly issued shares. Its shares rose 1.03% in premarket trading.

The company said the deal, expected to close in the second quarter of 2023, will immediately add to its free cash flow and distributable cash flow per unit.

The pipeline assets have a capacity of nearly 1.5 million barrels per day and cover major production areas of the Permian, adding 3,000 miles of crude gathering and transportation pipelines to ET's network.

The Centurion pipeline system is an integrated network of crude oil gathering and transportation pipelines that extend from southeast New Mexico across the Permian Basin of West Texas to Cushing, Okla.

Integrated assets also include two crude oil storage terminals in the Midland, Texas, and Cushing market centers with a combined storage capacity of 7 MMbbls and more than 125 truck stations.

RELATED: Energy Transfer Eyes Permian Gas Pipeline, Starts Gulf Run Construction

The Southeast New Mexico gathering system includes more than 50 miles of crude oil gathering pipelines with connections to the Centurion pipeline system and a third-party intra-basin system and related infrastructure.

The deal will raise Energy Transfer's storage capacity in Midland, Texas by 2 million barrels, the company said.

The deal also includes a 5% equity interest in the Wink to Webster Pipeline, a 650-mile system that transports more than one million barrels of crude oil and condensate per day from the Permian Basin to the Gulf Coast.

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