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Energy Transfer LP To Acquire Crestwood Equity Partners In $7B Deal

Natural gas pipeline operator Energy Transfer LP (NYSE:ET) has announced it will acquire midstream energy company Crestwood Equity Partners LP (NYSE:CEQP) in an all-stock deal valued at ~$7.1B, including the assumption of $3.3B of debt. The merger will help expand Energy Tranfer’s natural gas and crude oil transportation network, give it exposure to the Powder River basin and extend its presence in the Williston and Delaware basins.

Crestwood's assets spread across the three basins, and include about 2 billion cubic feet per day of gas-gathering capacity, 1.4 bcfpd of gas-processing capacity as well as 340,000 barrels per day (bpd) of crude-gathering capacity.

According to Energy Transfer, the acquisition will extend its position deeper into the Williston and Delaware basins while also providing entry into the Powder River basin. This will complement its downstream fractionation capacity at Mont Belvieu and increase its hydrocarbon export capabilities from its Nederland Terminal in Texas and the Marcus Hook Terminal in Pennsylvania. ET expects the acquisition to be immediately accretive to distributable cash flow per unit as well but neutral to its leverage metrics upon closing. Both companies’ cash flows are supported primarily by fee-based revenues from long-term contracts with investment-grade counterparties.

Energy Transfer reported Q2 revenue of $18.32B (-29.3% Y/Y), missing by $2.08B while Q2 GAAP EPS of $0.25 missed by $0.07. Distributable Cash Flow attributable to ET’s partners for the three months ended June 30, 2023 clocked in at $1.55 billion, drop from $1.88 billion posted for last year's corresponding period.

Crestwood reported Q2 revenue of $1.02B (-29.7% Y/Y), $140M lower than the Wall Street consensus while Q2 GAAP EPS of $1.16 beat by $0.33. The company expects full-year 2023 Adjusted EBITDA to fall within the $780 million to $860 million guidance range, but warned it’s likely to come in in the lower half of the range due to lower commodity prices.

By Alex Kimani for Oilprice.com

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