Energy Transfer, SemGroup Complete Merger Transaction

(January 3, 2020) — Energy Transfer LP (Dallas) and SemGroup Corp. (Tulsa) have announced the completion of their merger. The terms of the agreement were approved by holders of a majority of SemGroup’s outstanding voting stock Dec. 4. As a result of the merger, Energy Transfer issued about 57.6 million of its common units to SemGroup stockholders. Effective with the opening of the market Dec. 5, SemGroup ceased to be a publicly traded company and its stock was no longer traded on the New York Stock Exchange.

The combined operations of the two companies are expected to generate annual run-rate efficiencies of more than $170 million, consisting of commercial and operational synergies of $80 million, financial savings of $50 million, and cost savings of $40 million. Energy Transfer’s acquisition of SemGroup’s Houston Fuel Oil Terminal, or HFOTCO, strengthens its crude oil transportation, terminal capacity, and export capabilities, and provides Energy Transfer a strategic position on the Houston Ship Channel. HFOTCO is a world-class crude oil terminal with more than 18 MMbbl of storage capacity, five deep-water docks, and seven barge docks.

To provide shippers additional access from the Houston Ship Channel to markets along the Gulf Coast, Energy Transfer is constructing the Ted Collins pipeline, a 75-mile crude oil line that will connect HFOTCO to its Nederland, Texas terminal. The pipeline is expected to be in service in 2021 and will have an initial capacity of 500,000 bbld.

The acquisition expands Energy Transfer’s pipeline footprint by adding crude oil and NGL gathering systems and transmission lines in the Denver-Julesburg Basin in Colorado and the Anadarko Basin in Oklahoma and Kansas with connections to crude oil terminals in Cushing, Okla. The acquisition will also provide a significant natural gas gathering and processing presence in the Alberta Basin in western Canada.

(SOURCE: The Weekly Propane Newsletter, December 30, 2019)