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UPDATE: DTE Energy unit to acquire Haynesville Shale midstream assets for $2.25B


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UPDATE: DTE Energy unit to acquire Haynesville Shale midstream assets for $2.25B

DTE Energy Co. subsidiary DTE Midstream agreed to acquire a gathering system and gathering pipeline in the Haynesville Shale of Louisiana for $2.25 billion.

Under the deal, DTE Midstream would acquire 100% of the assets from midstream company Momentum Midstream LLC and Haynesville-focused producer Indigo Natural Resources LLC, according to an Oct. 18 news release. The assets to be acquired include an existing gathering system and a 150-mile gathering pipeline under construction. Upon the completion of the gathering pipeline, which is expected in the second half of 2020, DTE Midstream would make an additional $400 million milestone payment.

The assets are fully contracted and carry Haynesville-produced gas and have access to several markets, including the Gulf Coast and Louisiana, via major downstream pipelines.

The agreement is part of DTE's five-year investment plan in DTE Midstream, which would run from 2019 to 2023 and put in $4 billion to $5 billion into the business. At the project level, the deal is 15 cents accretive to operating earnings per share in 2020, which would increase to 45 cents per share over the next five years.

"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," DTE President, CEO and director Gerardo Norcia said in the release.

The transaction is scheduled to close in the fourth quarter, subject to customary closing conditions.

Barclays acted as the financial adviser while Shearman & Sterling LLP acted as legal counsel to DTE. Jefferies and Credit Suisse served as the financial adviser while Vinson & Elkins served as the legal counsel to Momentum. Kirkland & Ellis acted as legal counsel to Indigo.

DTE's operating units include an electric company with 2.2 million customers in southeast Michigan and a natural gas company serving 1.3 million customers in Michigan. Its portfolio also includes natural gas pipelines, gathering and storage, among other businesses.