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Energy Transfer acquire Lotus Midstream...

Energy Transfer (NYS: ET), the US-based operator of one of the largest and most diversified portfolios of energy assets in the US, acquired Lotus Midstream, the US-based independent energy company focused on the developments of infrastructure and services to transport crude oil. The deal value was USD$1.45 billion, which was split into USD$900m cash consideration, and 44.5 million newly issued Energy Transfer shares.

Based primarily in Texas, with approximately 3,000 miles of crude oil gathering and transportation pipelines, Lotus Midstream is an attractive offering, and this acquisition allows Energy Transfer to increase their footprint in that area of the US, as well as increasing overall connectivity for its crude oil transportation business.

On the back of this deal, Energy Transfer are looking to integrate these new pipelines and connectivity, by constructing a 30-mile pipeline from its Midland terminals to Cushing.

Share price movement has been minimal, however Energy Transfer changed their adjusted EBITDA expectation range from $12.9bn-$13.3bn up to $13.05bn-$13.45bn. This reflects the real value add of this acquisition, and also the general demand increases for energy.

The sell-side advisors on the deal were Jefferies Financial Group and Jefferies International, with the buy-side advisors as TD securities and J.P. Morgan Securities. This deal acted as a full exit for Lotus Midstream’s financial sponsor, EnCap Flatrock.

Energy Transfer reported very strong first quarter results, and the overall outlook for 2023 looked to be updated favourably, reflecting the strength of this acquisition and their position in the market.

Written by: Jack Clemmey

Sources: Reuters, Energy Transfer, NS Energy

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