2024 Midstream M&A Recap: Permian & Gas in Focus

• In 2024, M&A activity in the energy infrastructure space was concentrated in the Permian basin, which is the leading shale play in the U.S.
• Deal activity has been broad and varied, ranging from acquisitions of companies to small bolt-on deals.
• Recent transactions focused on natural gas infrastructure have been above or in line with where midstream equities were trading at the end of November.

The energy infrastructure space has seen significant M&A activity this year, with notable consolidations and asset deals being announced. Many of the transactions have been concentrated in the Permian basin, which is the most prolific shale play in the U.S., or focused on natural gas assets. Today’s note recaps some of the major deals announced this year and discusses the outlook for additional transactions in 2025.

As the most prolific shale basin in the U.S., the Permian has seen significant M&A activity this year as companies vie for inorganic growth opportunities and look to expand existing footprints (read more).

In July, Energy Transfer (ET) acquired WTG Midstream for $3.25 billion, marking one of the largest midstream transactions in the Permian this year. The deal significantly increased ET’s natural gas infrastructure in the basin, adding over 6,000 miles of gathering pipelines and significant natural gas processing capacity.

Similarly, Enterprise Products Partners (EPD) acquired Piñon Midstream for $950 million in October, adding gathering pipelines, treatment facilities, and disposal wells. The acquired assets enhance EPD’s presence in the Delaware portion of the Permian. Also in the Delaware, Kinetik Holdings (KNTK) acquired Durango Midstream’s assets in New Mexico for ~$800 million, adding 2,400 miles of gathering pipeline and 0.4 billion cubic feet per day (Bcf/d) of processing capacity.

In August, ONEOK (OKE) announced the acquisition of Medallion Midstream, a crude gathering, pipeline transportation, and storage company in the Permian in a $2.6 billion deal. In its recent earnings call, OKE management expects flows from Medallion’s gathering system to feed into its long-haul pipelines from the Permian to the Gulf Coast.

There have also been smaller asset acquisitions and minority interest sales in the Permian this year. For example, Plains (PAA) / (PAGP) acquired the Fivestones Permian crude gathering system in 3Q24, bringing in assets that were already flowing into long-haul PAA systems.

Long-haul pipelines have seen minority interest trades as well. For the BANGL natural gas liquids (NGLs) pipeline from the Permian to the Gulf Coast, a 20% interest was originally included in ET’s acquisition of WTG Midstream. However, the 20% interest was instead acquired by project partner MPLX, which had a right of first offer and now holds a 45% stake in the pipeline.

Delek Logistics (DKL) acquired an interest in the Wink to Webster (W2W) pipeline from its parent company, Delek US Holdings (DK). W2W is a 642-mile oil pipeline from the Permian to the Houston Ship Channel with over 1 million barrels per day of capacity. Lastly, KNTK sold its 16% stake in the Gulf Coast Express natural gas pipeline to ArcLight Capital Partners for $540 million, which equated to 10.4x 2024 expected EBITDA.

Smaller private names and assets are regularly bought and sold, but larger-sized mergers and acquisitions of public companies tend to be less common, especially as the universe has become more concentrated (read more). One of the more recent deals for a midstream name is the ongoing takeover of EnLink Midstream (ENLC) by OKE (read more). In October, OKE acquired  a 43% interest in ENLC and 100% of the interests in the managing member from Global Infrastructure Partners (GIP) for $3.3 billion. In November, OKE announced it would acquire the remaining outstanding publicly-held shares for $4.3 billion of OKE common equity, which is expected to be completed in early 2025. OKE’s acquisition of ENLC complements existing assets in the Permian and Oklahoma.

In March, natural gas producer EQT (EQT) announced it would acquire Equitrans Midstream (ETRN) in an all-stock deal that represented an 18% premium to its prior closing price. The acquisition, which closed in July, came less than six years after EQT completed the spinoff of ETRN, which it originally formed to hold EQT’s midstream assets. Between the deal’s announcement and closing, the Federal government finalized approvals of Equitrans’ Mountain Valley Pipeline (MVP), which began service in June.

In January, Sunoco (SUN) announced it would acquire NuStar Energy at a 32% premium to its prior close in a $7.3 billion deal that closed in May.. The transaction provided diversification by combining SUN’s existing fuel distribution and terminal network with NuStar’s refined product and crude oil terminal and pipeline infrastructure (read more).

While many of the deals in 2024 focused on the Permian, other transactions generally involved natural gas infrastructure. In late November, EQT announced a new joint venture with Blackstone Credit & Insurance, which agreed to pay $3.5 billion for a minority interest in certain natural gas midstream assets at an implied 12x EBITDA multiple. Another recent example is DT Midstream’s (DTM) acquisition of three natural gas pipelines in the Midwest from OKE for $1.2 billion, representing a 10.5x multiple to expected 2025 EBITDA. The three pipelines complement existing DTM assets and represent a combined ~1,300 miles of pipe with 3.7 Bcf/d of transportation capacity.

In August, TC Energy (TRP) completed its sale of Portland Gas Transmission company in New England to an affiliate of BlackRock for $1.14 billion (US$545 million net to TRP), as part of its stated target for $3 billion in divestitures this year. The transaction had an implied valuation multiple of 11.0x 2023 comparable EBITDA.

For context, at the end of November, the Alerian Midstream Energy Select Index (AMEI) was trading at a forward EV/EBITDA multiple of 10.5x based on 2026 Bloomberg consensus estimates, which is in line with or below these transactions.

With midstream generating significant free cash flow and companies having solid balance sheets, acquisitions can continue to provide an avenue for growth. However, given the consolidation seen in recent years, there could be fewer opportunities for M&A looking ahead. Meanwhile, companies continue to grow organically, expanding existing systems or sanctioning new projects. Midstream players with natural gas infrastructure have seen robust opportunities for organic growth given the strong outlook for long-term natural gas demand (read more). Company-level M&A is more difficult to predict but could continue as the energy sector has broadly seen consolidation in recent years.

With broad-based deal activity across asset type and geographies, 2024 was a notable year for midstream M&A. Dealmaking could remain an avenue for growth, given solid balance sheets and free cash flow generation, even as many companies see strong organic growth opportunities.

AMEI is the underlying index for the Alerian Energy Infrastructure ETF (ENFR) and the Alerian Energy Infrastructure Portfolio (ALEFX).

Permian Gas Fuels Midstream/MLP Investments

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How Consolidation Has Changed the Midstream Landscape

MLP M&A Monday: SUN Adding NuStar to Its Galaxy

Midstream’s Natural Gas Outlook Continues to Strengthen

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