Energy Transfer and Crestwood Equity Partners Announce Merger Agreement
Dallas & Houston, Texas, August 16, 2023 – Energy Transfer LP and Crestwood Equity Partners LP have taken a significant step towards consolidation by entering into a definitive merger agreement. The agreement outlines Energy Transfer’s acquisition of Crestwood in an all-equity deal worth around $7.1 billion. This transaction encompasses the assumption of $3.3 billion of debt, based on the August 15, 2023 closing price.
In line with the agreement, each Crestwood common unitholder will receive 2.07 Energy Transfer standard units for every Crestwood standard unit held. This merger is anticipated to conclude in the fourth quarter of 2023, pending the approval of Crestwood’s unitholders, regulatory clearances, and other customary closing conditions. Following the merger’s completion, Crestwood common unitholders are projected to own approximately 6.5% of Energy Transfer’s outstanding standard units.
Strategic Synergy and Asset Enhancement
Crestwood’s robust asset portfolio includes gathering and processing assets in the Williston, Delaware, and Powder River basins. This encompasses a gas gathering capacity of around 2.0 billion cubic feet per day, a gas processing capacity of 1.4 billion cubic feet per day, and a crude gathering capacity of 340 thousand barrels per day. If successfully concluded, this merger will further strengthen Energy Transfer’s foothold in the Williston and Delaware basins while facilitating entry into the Powder River basin. The assets in question are poised to seamlessly complement Energy Transfer’s downstream fractionation capacity at Mont Belvieu and enhance its hydrocarbon export capabilities from critical terminals.
The merger is also poised to bolster Energy Transfer’s NGL & Refined Products and Crude Oil businesses. Crestwood’s strategically positioned storage and terminal assets, boasting approximately 10 million barrels of storage capacity, are set to integrate into Energy Transfer’s operations. This will be complemented by trucking and rail terminals, fortified by dependable, long-term contracts with investment-grade producer customers and substantial acreage dedications.
Financial and Operational Gains
The merger promises instant benefits, with the transaction expected to be immediately accretive to distributable cash flow per unit for both partners. Moreover, it is projected to impact Energy Transfer’s leverage metrics upon finalization neutrally. Predominentities’-based revenues underpin the two entities’ cash flows through long-term agreements with investment-grade counterparts.
Energy Transfer envisions the mergers-scale and strengthened balance sheet to enable improved cost efficiencies, particularly about acquired debt securities. Structured as a 100% unit-for-unit exchange, the transaction is deemed tax-efficient for Crestwood unitholders and aims to create long-term value growth opportunities.
Energy Transfer anticipates unlocking annual run-rate cost synergies of at least $40 million and additional advantages stemming from financial and commercial opportunities.
