LNG

Energy Transfer, the owner of pipeline and other assets in the Permian Basin and other shale basins in the Gulf Coast states as well as the Cushing crude oil delivery system and with a currently stalled LNG export project at Lake Charles, has signed a deal to acquire WTG Midstream for $3.25 billion in cash and shares.

The latest US oil and gas acquisition comes in the busiest year on record for US mergers and acquisitions numbering more than a dozen in the past 12 months and involving energy majors like ExxonMobil Corp. and Chevron Corp. as well as second-rung operators.

Energy Transfer said it was buying WTG Midstream from affiliates of US assets manager Stonepeak, the Davis Estate and Midland, Texas-based Diamondback Energy.

Transaction terms

The total consideration for the transaction will comprise $2.45Bln in cash and around 50.8 million newly issued Energy Transfer common units.

The transaction is expected to close in the third quarter of 2024, subject to regulatory approval and customary closing conditions.

Energy Transfer, based in Dallas, Texas, said that WTG provided comprehensive midstream services including wellhead gathering, intra-basin transportation and processing services.

“The company’s 6,000-mile pipeline network serves significant operators in some of the most active areas of the Midland Basin including Martin, Howard, Upton, Reagan and Irion counties,” said a statement on the deal.

WTG also operates eight processing plants with a total capacity of around 1.3 billion cubic feet per day and is constructing two new plants with an additional capacity of 0.4 Bcf per day.

The first new plant is expected to be in service in the third quarter of 2024 and the second plant the third quarter of 2025.

Huge portfolio

Energy Transfer currently owns and operates one of the largest portfolios of energy assets in the US comprising more than 125,000 miles of pipeline and associated energy infrastructure.

The company’s strategic network spans 44 states with assets in all of the major US production basins.

Energy Transfer’s acquisition also includes a 20 percent interest in BANGL Pipeline, a 425-mile Natural Gas Liquids pipeline with an initial capacity of 125,000 barrels per day, expandable up to more than 300,000 barrels per day and connecting the Permian Basin to markets on the Texas Gulf Coast.

“The company benefits from well positioned assets in the Permian which is the most active region in the US and this acquisition is expected to provide future upside as the basin continues to develop on and around Energy Transfer’s infrastructure,” explained the company.

RBC Capital Markets is serving as financial advisor to Energy Transfer, and Vinson & Elkins LLP is acting as Energy Transfer’s legal counsel on the transaction.

Jefferies LLC is serving as financial advisor to WTG and Sidley Austin LLP is acting as WTG’s legal counsel.

Enbridge Inc, the Canadian-based pipelines and energy company, swung to a fourth-quarter profit from a previous loss and more than doubled annual profits as pipeline natural gas and liquids distributions increased amid the purchase of a gas utilities portfolio.

Atmos Energy Corp., the US natural gas distribution company serving more than 1,400 communities across eight mostly southern states, reported a rise in first-quarter profit as lower costs helped offset the impact of lower demand caused by milder weather.

The Dallas-based company posted net income for the three months to December, which is the Atmos fiscal first quarter, of $311 million versus $272M in the same three months of 2022.

Atmos said the earnings per share came to $2.08 per share compared with $1.91 per share in the prior-year quarter.

The company is active in the states of Colorado, Kansas, Kentucky, Louisiana, Mississippi, Tennessee, Texas and Virginia.

Customers

It provides natural gas, for example, to more than 184,500 customers in Kentucky communities such as Owensboro, Paducah, Hopkinsville, Lawrenceburg, Danville, Princeton and Campbellsville.

Atmos also has industrial customers in the states it serves and in Tennessee the distributor supplies natural gas to Bell Helicopter, the Jack Daniels whiskey distillery, General Motors and the Middle and East Tennessee State Universities.

The company reported that total capital expenditure in the quarter was $769.7M, slightly lower than the 2022 quarter.

Spending was focused on the repair and replacement of transmission and distribution pipelines as well as on gas fortifications and installing and replacing measurement and regulating equipment.

Atmos also issued $900M of long-term debt financing with $500M of 6.20-percent, 30-year senior notes issued in October 2023.

This was followed shortly afterwards by $400M of 5.90-percent, 10-year senior notes.

Full-year outlook

In its financial guidance for all of fiscal 2024, Atmos forecasts net profits of between $985M and $1.05 billion compared with $882M in the previous fiscal year.

In the coming fiscal year Atmos expects up to $665M in profits from the distribution business and up to $350M from pipelines and storage.

The board increased the quarterly dividend by 8.8 percent to $0.805 per common share.

The indicated annual dividend for fiscal 2024 was $3.22 per share.

“Our first-quarter results reflect the continued execution of our proven strategy by all of our 5,000 dedicated employees of operating safely and reliably while we modernize our natural gas distribution, transmission and storage systems,” said Kevin Akers, President and Chief Executive.

“This strategy, along with our employees' continued focus on our vision to be the safest provider of natural gas services, continues to benefit our customers, our communities, and it positions us to continue delivering annual earnings per share growth in the six to eight percent range,” Akers concluded.

TC Energy Corp., whose main current project is the building of the Coastal GasLink pipeline for the LNG Canada venture, has agreed to sell 40 percent stakes for C$5.2 billion (US$3.9Bln) in the two US assets, Columbia Gas Transmission and Columbia Gulf Transmission, the transporters of substantial US LNG feed-gas volumes.

TC Energy, the North American natural gas and energy pipelines company constructing pipeline links from British Columbia's shale basin to LNG projects on the coast, reported a surge in net income of more than three-fold as projects progressed from Canada to Mexico.

EQT Corp., one of the leading US natural gas producers and leader of the “Unleash US LNG” advocacy campaign, has formed a strategic alliance with Context Labs to advance the commercialization of verified low-carbon intensity natural gas products and carbon credits.

Williams, the US pipelines company and growing LNG sector participant, has closed the acquisition of MountainWest Pipelines Holding Company from Southwest Gas Holdings in a deal worth $1.5 billion and for a network covering three states.

Williams paid $1.07Bln in cash and $430 million of assumed debt for the MountainWest system

It comprises around 2,000-miles of interstate natural gas pipelines primarily located across Utah, Wyoming and Colorado.

The MountainWest pipelines carry 8 billion cubic feet per day of transmission capacity.

MountainWest also operates 56 Bcf of total storage capacity, including the Clay Basin underground storage reservoir, providing working gas to Western markets.

With the acquisition of MountainWest, Williams expands its infrastructure network and increases its business mix of Federal Energy Regulatory Commission-regulated natural gas transmission and storage.

Williams said the acquisition starts up the company’s services in the key Rockies gas markets, including natural gas delivery into Salt Lake City and other demand markets not previously served by Williams.

Natural gas focus

“Our natural gas focused strategy is anchored in having the right assets in the right places to serve our nation’s growing demand for clean, affordable and abundant natural gas,” said Alan Armstrong, the President and Chief Executive of Tulsa, Oklahoma-based Williams.

“This acquisition enhances our position in the Western US and is complementary to our current footprint, providing us with infrastructure for natural gas deliveries across key demand markets,” explained Armstrong.

“With the acquisition now complete, we look forward to welcoming MountainWest employees to Williams and bringing value to our shareholders by delivering safe and reliable services to both Williams and MountainWest customers as we increase the utilization of our existing large-scale platforms,” added the CEO.

Williams is also expanding its LNG activities and in mid-November 2022 said it had entered into a non-binding heads of agreement with Sempra Infrastructure, a subsidiary of California utility Sempra, to further connect the Haynesville shale basin to growing LNG export demand along the Gulf Coast .

The accord contemplates long-term gas sales of about 0.5 billion cubic feet per day delivered to near Gillis, Louisiana, and two LNG offtake agreements for around 3 million tonnes per annum in the aggregate from Sempra Infrastructure’s proposed Cameron LNG expansion and Port Arthur LNG project in Texas.

Williams said these proposed Sempra transactions complement the recently sanctioned low-carbon Louisiana Energy Gateway gathering project.

Kinder Morgan Inc. (KMI) the leading US pipeline feed-gas company for liquefied natural gas plants and a key energy infrastructure developer, reported an increase in fourth-quarter net income and planned to expand its network to meet soaring LNG feed-gas demand.

US LNG company Sempra Infrastructure, the owner of the Cameron export plant in Louisiana and developer of the Port Arthur project in Texas and other ventures in Mexico, has signed a cooperation accord with US pipelines group Williams Companies.

The American Gas Association (AGA) welcomes a new report that examines regulatory changes that will support investments and infrastructure improvements necessary to support broader energy system resilience.