DTE Midstream to acquire midstream assets in Haynesville Shale for $2.6bn

DTE Midstream has agreed to acquire an existing gathering system and a 150-mile gathering pipeline being constructed in the Haynesville shale formation of Louisiana in a deal valued up to $2.65 billion.

As per the agreement terms, the non-utility business of DTE Energy will buy 100% of the assets from Momentum Midstream and Indigo Natural Resources, which is the main gas producer supplying the system.

DTE Midstream will pay $2.25 billion followed by $400 million after completion of the gathering pipeline, which is expected to occur in the second half of next year.

The primary assets included in the deal gather natural gas drawn from the Haynesville shale basin and access various major downstream pipelines, including those catering to the Gulf Coast.

Jerry Norcia – president and CEO of DTE Energy said: “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. The successful operation of the Link asset, also purchased from Momentum, demonstrates the operating expertise and value creation DTE Midstream brings to this new system.

“In addition, the company gains a strong commercial partner in Indigo, one of the nation’s largest private natural gas producers supplying the rapidly growing demand in the Gulf Coast region. 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.”

According to DTE Energy, the assets to be acquired in Haynesville shale basin will improve the business of DTE Midstream and will give access to emerging Gulf Coast markets. The assets involved in the deal cater to various markets, including Louisiana and the Gulf Coast where demand for natural gas is quickly surging in the power, industrial and LNG export sectors, said DTE Energy.

DTE Energy, further said that the assets are located strategically to address the growing demand owing to their proximity and access to various important downstream pipelines with bi-directional capability.

The deal, which will be subject to customary closing conditions and regulatory approvals, is likely to be closed in Q4 2019.

Barclays is the financial advisor to DTE Energy in the deal, while Shearman & Sterling is serving as the legal counsel. For Momentum Midstream, the financial advisors for the deal are Jefferies and Credit Suisse, while  Vinson & Elkins is the legal counsel. For Indigo Natural Resources, Kirkland & Ellis is the legal counsel.