Energy Transfer to acquire Crestwood in $7.1 billion transaction

August 16, 2023 By    

Energy Transfer LP and Crestwood Equity Partners entered into a definitive merger agreement pursuant to which Energy Transfer will acquire Crestwood in an all-equity transaction valued at about $7.1 billion, including the assumption of $3.3 billion of debt, based on the closing price on Aug. 15.

Under the terms of the agreement, Crestwood common unitholders will receive 2.07 Energy Transfer common units for each Crestwood common unit. The transaction is expected to close in the fourth quarter, subject to the approval of Crestwood’s unitholders, regulatory approvals and other customary closing conditions. Upon closing, Crestwood common unitholders are expected to own about 6.5 percent of Energy Transfer’s outstanding common units.


Crestwood’s system includes gathering and processing assets located in the Williston, Delaware and Powder River basins, including about 2 billion cu. ft. per day of gas gathering capacity, 1.4 billion cu. ft. per day of gas processing capacity and 340,000 barrels per day of crude gathering capacity. If consummated, this transaction would extend Energy Transfer’s position in the value chain deeper into the Williston and Delaware basins while also providing entry into the Powder River basin. These assets are expected to complement Energy Transfer’s downstream fractionation capacity at Mont Belvieu, as well as its hydrocarbon export capabilities from both its Nederland Terminal in Texas and the Marcus Hook Terminal in Philadelphia.

This transaction is also expected to provide benefits to Energy Transfer’s crude oil and NGL and refined products businesses with the addition of strategically located storage and terminal assets, including about 10 million barrels of storage capacity, as well as trucking and rail terminals. These systems are anchored by predominantly investment-grade producer customers with firm, long-term contracts, and significant acreage dedications.

Financial impact

The transaction is expected to be immediately accretive to distributable cash flow per unit as well as neutral to Energy Transfer’s leverage metrics upon closing. Similar to Energy Transfer, Crestwood’s cash flows are supported by primarily fee-based revenues from long-term contracts with investment-grade counterparties. In addition, with the increased scale and strengthened balance sheet, Energy Transfer expects to be able to improve on the current cost of financing for the acquired debt securities. Structured as a 100 percent unit-for-unit exchange, the transaction is tax-efficient to Crestwood unitholders and is anticipated to position both partnerships for long-term value upside through the combination.

Energy Transfer also expects to achieve at least $40 million of annual run-rate cost synergies before additional benefits of financial and commercial opportunities.

The transaction is expected to provide Crestwood unitholders a benefit to distributions per unit and an opportunity to participate in Energy Transfer’s targeted annual distribution per unit growth rate of 3 percent to 5 percent.

BofA Securities acted as sole financial adviser to Energy Transfer, and Kirkland & Ellis LLP acted as legal counsel. Intrepid Partners LLC and Evercore acted as financial advisers to Crestwood, and Vinson & Elkins LLP acted as legal counsel.

Featured homepage image: designer491/iStock / Getty Images Plus/Getty Images

Comments are currently closed.