Western Midstream acquires Meritage Midstream for $885M in cash

Western Midstream Partners, announced that one of its operating subsidiaries has signed an agreement to acquire Meritage Midstream Services II, or Meritage in an all-cash transaction for a purchase price of $885M , subject to customary adjustments. Meritage, a privately held midstream company headquartered in Denver, Colorado, owns and operates a large-scale natural gas gathering and processing business in the Powder River Basin of Wyoming. Completion of the transaction is expected in the fourth quarter of 2023, subject to customary closing conditions and regulatory approvals. Meritage’s assets, located in Converse, Campbell, and Johnson counties, Wyoming, include approximately 1,500 miles of high- and low-pressure natural gas gathering pipelines, approximately 380 MMcf/d natural gas processing capacity, and the Thunder Creek NGL pipeline; a 120 mile, 38 MBbl/d FERC-regulated NGL pipeline that connects to Meritage’s processing facilities. The Meritage assets are supported by more than 1.4 million dedicated acres from a diverse set of majority investment grade counterparties, with an average remaining contract life of approximately eight years. Following the integration of the Meritage assets, WES will be well positioned to compete for additional acreage dedications and business development opportunities from offset producers in the basin. WES expects the transaction to close during the fourth quarter of 2023. Given the uncertain timing of closing within the fourth quarter, WES is not updating its 2023 Adjusted EBITDA guidance range at this time. “We are excited to announce the transformation of our Powder River Basin footprint with the acquisition of Meritage,” commented Michael Ure, President and Chief Executive Officer of WES. “The Meritage transaction provides another source of steady, profitable growth for WES due to its long-term contracts with expansive acreage dedications and minimum-volume commitments. Based on the expected Free cash flow benefits of the acquisition, management expects to recommend a Base Distribution increase of $0.0125 per unit, or $0.05 per unit on an annualized basis, following the closing of the transaction,” Mr. Ure concluded.