Energy major Energy Transfer (NYSE:ET) has agreed to acquire Lotus midstream Operations for a consideration of $1.45 billion from an affiliate of EnCap Flatrock Midstream.
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The transaction includes $900 million in cash and a new issuance of 44.5 million ET common units. Lotus owns the Centurion Pipeline company in the Permian Basin operating about 3,000 miles of pipeline. The company has about 1.5 million barrels a day capacity alongside a 2 million barrel storage capacity.
The move expands ET’s presence in the Permian Basin while also boosting connectivity for oil transport and storage. Further, the deal also offers ET access to major downstream markets.
The deal is anticipated to close in the second quarter of this year and upon closing, ET also plans to commence construction of a 30-mile pipeline which will enable it to originate barrels from midland terminals for delivery to Cushing.
Overall, the Street has a $16.86 consensus price target on ET, pointing to a 44.1% potential upside. That’s on top of a 14.5% rise in the share price over the past six months.
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