Energy Transfer LP has agreed to acquire Lotus Midstream Operations LLC in a deal that will increase its crude pipeline assets across the Permian basin.
The definitive agreement signed with an affiliate of EnCap Flatrock Midstream values the deal at about $1.45 billion ($900 million cash and about 44.5 million newly issued Energy Transfer common units).
Lotus Midstream owns and operates Centurion Pipeline Co. LLC, an integrated, crude midstream platform in the basin. The company provides a full suite of midstream services including wellhead gathering, intra-basin transportation, terminalling, and long-haul transportation services. Its system, encompasses about 3,000 active miles of pipeline from southeast New Mexico across the Permian basin of West Texas to Cushing, Okla., with nearly 1.5 million b/d of capacity, Energy Transfer said in a release Mar. 27.
Lotus Midstream’s Midland terminal offers 2 million bbl of crude oil storage capacity and additional supply and demand connectivity.
The acquisition also includes a 5% equity interest in the Wink to Webster Pipeline, a 650-mile system transporting more than 1 million b/d of crude oil and condensate from the Permian basin to the Gulf Coast (OGJ Online, Oct. 16, 2020).
Increased connectivity, new construction
In addition to increasing Energy Transfer’s footprint in the Permian basin, the deal provides increased connectivity for the company’s crude oil transportation and storage businesses, providing direct access to hubs in Cushing, Midland, Colorado City, Wink, and Crane.
Upon closing—expected in second-quarter 2023 subject to regulatory approval and closing conditions—Energy Transfer expects to begin construction on a 30-mile pipeline project that will allow the company and its customers the ability to originate barrels from its Midland terminals for ultimate delivery to Cushing. The project is expected to be completed in first-quarter 2024.