Western Midstream Partners To Buy Meritage Midstream Services II For $885 Mln Cash

Western Midstream Partners, LP (WES) announced Tuesday an agreement to acquire Meritage Midstream Services II, LLC in an all-cash transaction for a purchase price of $885 million, subject to customary adjustments.

Western Midstream’s one operating subsidiary has signed the deal to buy Meritage. The company expects to complete the deal in the fourth quarter of 2023, subject to customary closing conditions and regulatory approvals.

Citing the uncertain timing of closing within the fourth quarter, WES is not updating its 2023 Adjusted EBITDA guidance range at this time.

Based on the expected Free cash flow benefits of the acquisition, the company expects to recommend a Base Distribution increase of $0.0125 per unit, or $0.05 per unit on an annualized basis, following the closing of the transaction.

Meritage, a Denver, Colorado -based privately held midstream company, owns and operates a large-scale natural gas gathering and processing business in the Powder River Basin of Wyoming. Its assets, include around 1,500 miles of high- and low-pressure natural gas gathering pipelines, around 380 MMcf/d natural gas processing capacity, and the Thunder Creek NGL pipeline, among others.

Michael Ure, President and Chief Executive Officer of WES, said, “The addition of the Meritage assets meaningfully expands the financial and operational scale of our existing Powder River Basin footprint by adding significant producer inventory and further diversifying our growing G&P customer portfolio…. The Meritage transaction provides another source of steady, profitable growth for WES due to its long-term contracts with expansive acreage dedications and minimum-volume commitments.”

In the deal, Citi served as financial advisor to WES and Jefferies LLC served as financial advisor to Meritage.

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