Power Switch LP is buying WTG Midstream Holdings LLC in a transaction valued at roughly $3.25 billion from associates of Stonepeak, the Davis Property and Diamondback Power, Inc.
Consideration for the transaction will likely be composed of $2.45 billion in money and roughly 50.8 million newly issued Power Switch frequent models. The transaction is predicted to shut within the third quarter, topic to regulatory approval and customary closing circumstances, the partnership mentioned in a information launch.
WTG offers complete midstream providers together with wellhead gathering, intra-basin transportation and processing providers. The corporate’s 6,000-mile pipeline community serves vital operators in a number of the most energetic areas of the Midland Basin together with Martin, Howard, Upton, Reagan and Irion counties, in accordance with the discharge.
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WTG additionally operates eight processing vegetation with a complete capability of roughly 1.3 billion cubic ft per day (Bcfpd) and is establishing two new vegetation with a further capability of roughly 0.4 Bcfpd. The primary new plant is predicted to be in service within the third quarter, and the second plant within the third quarter of 2025.
WTG’s intensive system processes vital volumes from giant cap funding grade producers with agency, long-term contracts and acreage dedications, Power Switch mentioned, including that the property will present it with elevated entry to rising provides of pure gasoline and pure gasoline liquids (NGL) volumes, enhancing the partnership’s Permian operations and downstream companies.
The acquisition additionally features a 20 p.c curiosity in BANGL Pipeline, an roughly 425-mile NGL pipeline with an preliminary capability of 125,000 barrels per day (bpd), expandable as much as 300,000 bpd. The pipeline connects the Permian Basin to markets on the Texas Gulf Coast.
Power Switch mentioned the acquisition is predicted to offer “future upside” because the basin continues to develop on and round its infrastructure. The transaction is predicted to more and more add incremental income from downstream NGL transportation and fractionation charges.
Power Switch mentioned it expects the WTG property so as to add roughly $0.04 of Distributable Money Movement (DCF) per frequent unit in 2025, rising to roughly $0.07 per frequent unit in 2027. WTG’s money flows are supported by a high-quality buyer base, predominantly funding grade, with a median contract lifetime of greater than eight years.
In line with Diamondback Power, the transaction will lead to complete pre-tax consideration internet to Diamondback of roughly $375 million, topic to customary closing circumstances and changes.
“We wish to congratulate Stonepeak and the WTG staff on this unbelievable end result,” Diamondback Chairman and CEO Travis Stice mentioned. “Not solely has our partnership generated an outsized financial return, however WTG’s gasoline gathering and processing system continues to help Diamondback’s substantial exercise on our devoted acreage. We’re excited to additional broaden our relationship with Power Switch and count on a clean operational transition”.
Power Switch owns and operates one of many largest and most diversified portfolios of power property within the USA, with greater than 125,000 miles of pipeline and related power infrastructure. Power Switch’s strategic community spans 44 states with property in the entire main U.S. manufacturing basins.
Diamondback is an unbiased oil and pure gasoline firm headquartered in Midland, Texas targeted on the acquisition, improvement, exploration and exploitation of unconventional, onshore oil and pure gasoline reserves within the Permian Basin in West Texas.
To contact the writer, e-mail rocky.teodoro@rigzone.com
