Western Midstream Partners, LP (NYSE: WES) is set to expand its footprint in the Powder River Basin through the acquisition of Meritage Midstream Services II, LLC (Meritage). This all-cash transaction comes with a price tag of $885 million and is expected to close in the fourth quarter of 2023, subject to regulatory approvals.
Meritage, headquartered in Denver, Colorado, operates a substantial natural gas gathering and processing business in Wyoming’s Powder River Basin. The acquisition will significantly increase WES’s natural gas processing capacity, taking it to 440 MMcf/d. Additionally, it will diversify WES’s customer base with long-term contracts and acreage dedications from reputable counterparties.
The Powder River Basin has attracted considerable investment due to its multi-stacked pay horizon potential, making it an appealing prospect for energy companies. As part of this acquisition, WES aims to enhance its position in the basin and pursue additional acreage dedications and business development opportunities.
Upon completing the transaction, WES anticipates recommending a Base Distribution increase of $0.0125 per unit, providing a potential boost for its investors.
This strategic move represents a significant step for WES in expanding its presence in a region with promising energy prospects.