A Robust Collaboration Emerges
In a move that reeks of ambition and strategic foresight, Energy Transfer (NYSE:ET) and Sunoco (SUN) have come together to meld their crude oil and produced water gathering assets in the vast expanse of the Permian Basin.
This venture, birthed from a shared vision of operational synergy, sees Energy Transfer stepping up as the authoritative operator. Energy Transfer is set to infuse the joint entity with its Permian crude oil and produced water gathering assets and operations, while Sunoco will bring all its Permian crude oil gathering assets and operations to the table.
The marriage of these giants in the industry will oversee a colossal network entwining over 5,000 miles of pipelines dedicated to crude oil and water gathering. With a storage capacity exceeding 11 million barrels, the joint venture is primed to make waves in the ever-volatile energy market.
An Equitable Alliance in the Making
Energy Transfer, with its eyes set on dominance, will lay claim to a commanding 67.5% stake in the venture. Meanwhile, Sunoco stakes its claim to a respectable 32.5%. The rationale behind this distribution bespeaks a deep dive into calculus, as both corporations covet the immediate boost in distributable cash flow this venture is poised to bring.
In a parallel development, the CEO of Energy Transfer announced on Monday the seamless finalization of the acquisition deal with WTG Midstream. A cash layout of $2.275 billion, along with around 50.8 million freshly minted common units, secured this union. The strategic advantage brought forth by this procurement cannot be overstated.
Leveraging the acquired assets, Energy Transfer now fortifies its already expansive network with an additional 6,000 miles of gas gathering pipelines deploying the signature tapestry of the Midland Basin. The purchase also grants access to eight gas processing plants boasting a cumulative capacity of 1.3 billion cubic feet per day. This formidable empire of pipelines and plants has immense potential, amplified by two forthcoming processing plants currently on the anvil.