DTE Energy’s subsidiary DTE Midstream has agreed to acquire a gathering system and pipeline in the Haynesville shale formation in Louisiana, US.
The cost of the transaction includes a purchase price of $2.25 billion (€2.02 billion) in case, plus an additional $400 million (€360 million) milestone payment when the gathering pipeline is completed in the second half of 2020.
Under the terms of the deal, DTE will acquire 100% of the assets from Momentum Midstream and Indigo Natural Resources, the primary gas producer supplying the system. Assets include an existing gathering system and a 150-mile gathering pipeline currently under construction.
The assets gather natural gas produced in the Haynesville shale basin and access multiple downstream pipelines, including those serving the US Gulf Coast.
"DTE's non-utility operations continue to grow, perform well and fit nicely into our planned utility and non-utility mix," said Jerry Norcia, president and CEO of DTE Energy. "This acquisition significantly enhances the strength and diversity of DTE Midstream, adding premium assets in one of the fastest growing and best positioned US shale formations.
“The successful operation of the Link asset, also purchased from Momentum, demonstrates the operating expertise and value creation DTE Midstream brings to this new system. In addition, the company gains a strong commercial partner in Indigo, one of the nation's largest private natural gas producers supplying the rapidly growing demand in the Gulf Coast region.
"This acquisition is highly accretive, has world-class resources, has excellent access to large markets, and is in the early- to mid-cycle development phase. It checks all of our boxes.”
The transaction has been approved by DTE Energy’s board of directors and is expected to close by the end of 2019, subject to customary closing conditions and regulatory approvals.
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