18 August 2023

Energy Transfer acquires Crestwood

Energy Transfer, a leading U.S. pipeline consortium, acquires rival Crestwood Equity Partners for $7.1 billion. This is the latest consolidation within the North American fuel infrastructure sector, a trend that is emerging as a result of the growing challenges associated with new project development in the sector. Crestwood's infrastructure is capable of transporting approximately 2 billion cubic feet of gas per day and 340,000 barrels of oil per day.

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The deal is a continuation of the acquisition strategy of Energy Transfer co-founder and majority shareholder Kelcy Warren, who earlier this year bought smaller rival Lotus Midstream for $1.45 billion. The companies said Crestwood shareholders will receive 2.07 shares of Energy Transfer common stock for each share of Crestwood common stock. Upon completion of the transaction, expected in the fourth quarter of this year, Crestwood shareholders will own approximately 6.5% of Energy Transfer's outstanding common stock. In addition, Energy Transfer expects to achieve at least $40 million in annual cost reductions from the transaction.

The energy industry in the US has seen a sharp increase in transactions, helped by recent strong revenues that have provided companies in the sector with significant financial resources. In particular, the midstream energy sector has seen increased M&A activity due to the challenges associated with expanding pipeline capacity in the face of opposition not only from local landowners but also from environmental advocates seeking to prevent the creation of new infrastructure that perpetuates dependence on fossil fuels.

For example, in May this year, Oneok bought pipeline firm Magellan Midstream Partners for $18.8 billion. In addition, TC Energy last month revealed its intention to spin off its pipeline business. The decision comes two years after a plan to build the Keystone XL pipeline, which would have transported oil from the Canadian province of Alberta to the southern United States, was halted following the revocation of a key permit by US President Joe Biden.