10/18/19 – DTE announced large Haynesville midstream acquisition
DTE Midstream entered into an agreement to acquire a gathering system and gathering pipeline in the resurging Haynesville shale formation of Louisiana for a purchase price of $2.25 billion in cash, plus a $400 million milestone payment upon completion of the gathering pipeline in the second half of 2020. Under the terms of the agreement, DTE will acquire 100 percent of the midstream assets from Momentum Midstream and Louisiana’s largest gas producer Indigo Natural Resources. Assets that are part of the acquisition include an existing gathering system with 1.2 Bcf/d capacity (expandable to 2 Bcf/d) and a 150-mile, 36” gathering pipeline under construction, which will be in service in the second half of 2020.
“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 U.S. shale formations. 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,” Norcia added. Key strategic and financial benefits include
- Assets in Louisiana’s highly-economic Haynesville shale basin will enhance DTE Midstream’s business and provide access to growing Gulf Coast markets. The assets serve multiple markets, including Louisiana, the nation’s third largest natural gas consumer, and the growing Gulf Coast where demand for natural gas is rapidly increasing in the power, industrial/pet. chem. and LNG export sectors. DTE has a proven track record of creating value in multiple basins starting more than 30 years ago in the Michigan producing basin, then the Texas Barnett Shale (sold 2007) and more recently in the Appalachian basin. Haynesville provides the next opportunity for DTE to create significant value with its midstream assets in a high-quality basin.
- Strong returns, backed by long-term contracts and strong credit provisions, with an experienced producer.Through this acquisition, DTE Midstream is investing in strong and strategically situated assets that are supported by long-term contracts. The acquired assets are fully contracted with a remaining tenor of 13.5 years for the existing gathering system and a 10-year contract for the 36” diameter gathering pipeline that is currently under construction. Indigo is one of the largest private producers in the U.S., and the largest natural gas producer in Louisiana. Strong credit including use of proceeds leaves Indigo with a strong balance sheet.
The transaction has been approved by DTE Energy’s Board of Directors and is expected to close in the fourth quarter of 2019, subject to customary closing conditions and regulatory approvals.