- Deal includes $1.95 billion cash and about 33.3 million shares
- Vaquero brings about 300 miles of pipeline across four West Texas counties
- Contracts are fee-based, backed by 100,000 acres and about 10 years remaining
Oct 6 (Reuters) - Energy Transfer said on Tuesday it has agreed to acquire Vaquero Midstream in a deal valued at about $2.6 billion in cash and stock, expanding the pipeline company's midstream operations.
The deal includes $1.95 billion in cash and about 33.3 million of its newly issued shares, Energy Transfer said.
It expects to invest between $5 billion and $5.5 billion in capital in 2026, primarily in its natural gas network projects, the company said earlier this year.
Shares of Energy Transfer fell 1.2% in morning trading.
It said the assets, which are linked to its existing natural gas and natural gas liquids infrastructure, would provide additional volumes for its transportation, fractionation, terminalling and export businesses.
"This is a continuation of midstream consolidation as the sector rolls up, highlighting the value of the assets," said James West, an analyst at Melius Research.
He said the combination of inorganic and organic expansion projects was positioning midstream companies for a decade-plus growth cycle and could support further upside valuation across the sector. The acquisition is expected to close in the fourth quarter of the year.
Vaquero operates roughly 300 miles of pipeline across the Loving, Reeves, Ward and Winkler counties in Texas, servicing producers in the Southern Delaware Basin.
Its Caymus Processing Complex has three processing trains with a combined capacity of about 675 million cubic feet per day.
Vaquero's contracts are fee-based and supported by about 100,000 dedicated acres, with an average remaining contract term of approximately 10 years.
Reporting by Pranav Mathur in Bengaluru; Editing by Pooja Desai
Source: Reuters