Energy Transfer to buy SemGroup in $5bn deal

Midstream energy company Energy Transfer has agreed to acquire oil and natural gas transport firm SemGroup in a unit and cash transaction valued at $5.1bn.

SemGroup shareholders will receive $6.80 a share in cash and the transaction values the company at $17 a share.

The received equity consideration is anticipated to be treated as a tax-free transaction.

Headquartered in Tulsa, Oklahoma, SemGroup transports oil, natural gas and other products across North America via a network of pipelines, processing plants, refinery-connected storage facilities and deepwater marine terminals.

SemGroup’s assets are located in Canada, the Mid-Continent and the Gulf Coast, and interconnected with key markets and logistics centres. The company employs 1,000 people across its operations.

Expected to close later this year or in early 2020, the transaction will increase Energy Transfer’s scale across various regions and provide increased connectivity for the company’s crude oil and natural gas liquid (NGL) transportation businesses.

The acquisition would also add to Energy Transfer’s crude oil and NGL infrastructure with assets in the DJ Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas, as well as offer a significant crude oil gathering and transportation presence in Canada’s Alberta Basin.

Energy Transfer will also gain access to SemGroup’s Houston Fuel Oil Terminal Company (HFOTCO), a crude oil terminal on the Houston Ship Channel with 18.2 million barrels of crude oil storage capacity, five deepwater ship docks and seven barge docks.

SemGroup CEO Carlin Conner said: “This strategically and financially compelling combination will result in SemGroup joining one of the largest midstream energy companies in the country, with a strong footprint in all major US production basins.

“The combined entity’s size, scale and financial profile will ensure that SemGroup’s assets, including our Gulf Coast terminal, mid-continent footprint and our Canadian joint venture SemCAMS Midstream, benefit from significant growth well into the future.”

Energy Transfer has also unveiled plans to build an approximately 75-mile crude oil pipeline between the Houston Ship Channel and Nederland, Texas, to provide a connection between the company’s Nederland and the HFOTCO crude oil terminals in the US.