Energy Transfer has entered into a definitive agreement to acquire Vaquero Midstream in a bolt-on transaction valued at approximately $2.625 billion, expanding its natural gas gathering and processing infrastructure in the Delaware Basin.
The consideration will consist of $1.95 billion in cash and approximately 33.3 million newly issued Energy Transfer common units.
The transaction is expected to close during the fourth quarter of 2026, subject to regulatory approval and customary closing conditions.
Vaquero operates a growing natural gas midstream platform that includes wellhead gathering, intrabasin transportation pipelines and natural gas processing infrastructure across the Southern Delaware Basin in Texas.
The company’s approximately 300-mile pipeline network serves producers across Loving, Reeves, Ward, and Winkler counties, some of the most active areas of the Delaware Basin.
A central component of the acquisition is Vaquero’s Caymus Processing Complex.
The facility includes three natural gas processing trains with a total capacity of approximately 675 million cubic feet per day.
Vaquero also owns enough acreage to build two additional processing trains, potentially increasing the complex’s total capacity to about 1.2 billion cubic feet per day.
That expansion potential gives Energy Transfer an opportunity to increase processing capacity as natural gas production grows across the surrounding Delaware Basin acreage.
Vaquero’s system is supported by long-term, fee-based firm contracts and acreage dedications, providing Energy Transfer with contracted cash flows alongside the potential for additional volume growth.
The business has approximately 100,000 dedicated acres.
Its customer contracts have an average remaining life of approximately 10 years.
Energy Transfer expects the Vaquero acquisition to be immediately accretive to distributable cash flow per common unit.
Beyond the acquired assets, the transaction offers strategic benefits because Vaquero’s system is already interconnected with Energy Transfer’s downstream natural gas and natural gas liquids infrastructure.
That connectivity is expected to allow volumes gathered and processed through Vaquero’s system to flow into additional parts of Energy Transfer’s network.
Energy Transfer sees opportunities to generate incremental revenue through natural gas pipeline transportation, NGL fractionation, terminalling and export services.
The acquisition is expected to create value beyond Vaquero’s standalone gathering and processing cash flows by directing additional volumes into infrastructure Energy Transfer already owns and operates.
The deal will also expand Energy Transfer’s position in the Permian Basin as production growth creates additional demand for gathering, processing, and downstream transportation capacity.
The Delaware Basin is one of North America’s most active and lowest-cost producing regions, and Vaquero’s assets are located in areas where continued development could generate additional natural gas and NGL volumes.
Energy Transfer’s broader infrastructure network lets the company connect those upstream production volumes to downstream markets through multiple stages of the energy value chain.
The partnership operates approximately 140,000 miles of pipelines and associated energy infrastructure across 44 states, with assets in all major U.S. production basins.
Its operations span natural gas gathering, processing, transportation, and storage; crude oil, NGL, and refined product transportation and terminalling; and NGL fractionation.
Vaquero was formed with capital support from Yorktown Partners and Keeneland Capital.
The company provides gathering, treating, processing, compression, liquids handling, and natural gas transmission services to producers across the Southern Delaware Basin.
Support: J.P. Morgan Securities is serving as financial adviser to Energy Transfer, while Sidley Austin is serving as legal counsel. Houlihan Lokey is serving as financial adviser to Vaquero, with Willkie Farr & Gallagher acting as legal counsel.
