Energy Transfer Bets US$2.6B on the Permian's Gas Bottleneck

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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Key Investor Takeaways

• Energy Transfer agreed to buy Vaquero Midstream, a Delaware Basin natural gas gathering and processing company, for about US$2.625 billion in cash and units, with closing expected in the fourth quarter.
• Vaquero brings about 300 miles of pipeline and 675 million cubic feet per day of processing capacity, with room to expand to about 1.2 billion cubic feet per day.
• Vaquero's cash flows are supported by long-term, fee-based contracts with an average remaining life of approximately 10 years, and Energy Transfer expects the acquisition to be immediately accretive to distributable cash flow per common unit.
• Booming Permian gas output has outrun pipeline capacity this year, pushing West Texas gas prices below zero for months.
• Newsletter writer Ron Struthers called the deal "a timely example" of the value of energy infrastructure.
• Energy Transfer moved its common units from the New York Stock Exchange to the Texas Stock Exchange, where they began trading on October 5 under the same "ET" ticker.

Too Much Gas, Too Few Pipes: Why the Permian Is Worth US$2.6 Billion

West Texas Intermediate crude traded at about US$93.36 a barrel on October 12, up about 57% from a year earlier, according to Trading Economics. Attacks in the Middle East and on tankers in the Strait of Hormuz have kept supply concerns high, even as prices eased about 8% over the past month.

High oil prices are keeping Permian Basin drillers busy, and every barrel they pump brings natural gas up with it. The U.S. Energy Information Administration expects Permian gas output to average 29.2 billion cubic feet per day this year, up 6% from 2025, as total U.S. gas production heads for a record, the agency said in August. In its October outlook, the EIA forecast record U.S. crude production of 13.87 million barrels per day in 2026 and marketed natural gas production of about 123.5 billion cubic feet per day, Advisor Perspectives reported.

Getting that gas out of West Texas has been the problem. Gas prices at the Waha hub traded below zero from February to early June, falling as low as minus US$9.55 per million British thermal units in mid-April, according to East Daley Analytics. Some Delaware Basin producers curtailed output rather than sell at a loss. The benchmark Henry Hub price stood at about US$3.16 on October 12, Trading Economics reported.

That's the market Energy Transfer LP (ET:TXSE) is betting on. On October 6, it agreed to buy Vaquero Midstream LLC, a Delaware Basin gas gathering and processing company, for about US$2.625 billion, according to a release.

300 Miles of Pipe and Room to Nearly Double Processing

Energy Transfer will pay US$1.95 billion in cash and issue about 33.3 million new common units. The deal is expected to close in the fourth quarter, subject to regulatory approval and customary conditions.

Vaquero runs an approximately 300-mile pipeline network serving producers in Loving, Reeves, Ward, and Winkler counties, some of the most active areas of the Delaware Basin. It operates the Caymus Processing Complex, which has three processing trains with about 675 million cubic feet per day of capacity. Vaquero owns enough land to add two more trains, which could raise capacity to about 1.2 billion cubic feet per day.

The system runs on long-term, fee-based contracts and about 100,000 dedicated acres, and its customers' contracts have an average of about 10 years left. Vaquero was formed with backing from Yorktown Partners and Keeneland Capital.

From the Wellhead to the Export Dock

Vaquero's pipelines already connect to Energy Transfer's downstream natural gas and natural gas liquids system. Energy Transfer said that the link should bring in more revenue from transportation, fractionation, terminalling, and exports, and that the deal will add to distributable cash flow per common unit right away.

The purchase builds on Energy Transfer's push in the Permian. Its Hugh Brinson Pipeline, which carries Permian gas toward the Dallas–Fort Worth area, entered commercial service this summer with Phase I capacity of 1.5 billion cubic feet per day, the company said in August. In the second quarter, Energy Transfer reported record NGL exports and record gathered volumes, and adjusted EBITDA rose 31% to US$5.07 billion. The company raised its 2026 adjusted EBITDA guidance to US$18.8 billion to US$19.1 billion and plans US$5.6 billion to US$5.9 billion in growth capital spending.

Energy Transfer owns about 140,000 miles of pipeline and energy infrastructure across 44 states.

In September, Energy Transfer said it would move its listings from the New York Stock Exchange to the Texas Stock Exchange, and its units began trading there on October 5 under the same ticker, according to a release.

A 6.6% Yield and a Deal That Could Grow It

Ron Struthers, editor of the Struthers Resource Stock Report, reiterated a Buy on Energy Transfer in an October 8 issue and called the Vaquero purchase "a timely example" of the value of pipelines. "Higher energy prices reinforce the strategic importance of North America's energy infrastructure," he wrote.

Vaquero's facilities already connect to Energy Transfer's system, "potentially increasing volumes throughout its transportation, processing, storage, and export network," Struthers wrote. "Unlike exploration companies, Energy Transfer generates much of its revenue from handling and transporting energy commodities rather than directly depending on commodity prices." He said investors "should monitor acquisition debt, integration costs, unit dilution, and whether expected cash flow improvements materialize."

Ron Struthers, editor of the Struthers Resource Stock Report, reiterated a Buy on Energy Transfer in an October 8 issue and called the Vaquero purchase "a timely example" of the value of pipelines. 

Energy Transfer has been in Struthers' Millennium Index since 2019 at an entry price of US$14.50. The distribution yields 9.38% on that entry price, based on the current annualized distribution, and approximately 6.6% at US$20.62, he wrote. "I suggest Energy Transfer as a Buy if you don't already own some because the investment thesis remains straightforward and the same," Struthers wrote. "This acquisition could strengthen that long-term income strategy."

He sees support between about US$18.50 and US$20 and resistance between US$20.75 and US$21.50, which the units must clear before testing new highs.

Twelve of the 15 analysts covering Energy Transfer in the past three months rate it a Buy and three a Hold, according to TipRanks. Their average target of US$24.23.

Since the deal was announced, J.P. Morgan's Jeremy Tonet reiterated a Buy and US$25 target, Scotiabank's Brandon Bingham a Buy and US$24 target, and Goldman Sachs' John Mackay a Hold and US$22 target.

Dealmakers Race for West Texas Gas

The Vaquero deal came the same day that ONEOK Inc. (OKE:NYSE) announced it had closed its US$4.425 billion purchase of Brazos Midstream's Midland Basin gathering and processing assets, the Permian's other major sub-basin.

More room to move gas is coming. Three projects could add about 4.5 billion cubic feet per day of Permian takeaway capacity by the end of 2026, East Daley estimated in July: the Gulf Coast Express expansion, WhiteWater's 2.5-billion-cubic-foot-per-day Blackcomb line, and Energy Transfer's Hugh Brinson. The EIA expects U.S.-marketed gas output to keep climbing, to about 127.9 billion cubic feet per day in 2027.

Ownership and Share Structure¹

About 10.27% of Energy Transfer LP is owned by management and insiders, about 0.02% by strategic investors, and about 32.05% by institutions. The rest is retail.

Its market cap is US$70.38 billion with 3.44 billion shares (common units) outstanding. It trades in a 52-week range of US$16.18 and US$21.84.

Common Questions from Investors

What is Energy Transfer buying? Vaquero Midstream, which runs about 300 miles of pipeline in Loving, Reeves, Ward, and Winkler counties in the Delaware Basin, operates the Caymus Processing Complex. Caymus has three processing trains totaling about 675 million cubic feet per day, and Vaquero has land for two more that could raise capacity to about 1.2 billion cubic feet per day.

How is Energy Transfer paying? US$1.95 billion in cash and about 33.3 million new common units, for a total of about US$2.625 billion.

When is the deal expected to close? In the fourth quarter of 2026, subject to regulatory approval and customary closing conditions.

How does the deal help Energy Transfer? Vaquero's pipelines already connect to Energy Transfer's downstream gas and NGL network, which the company expects to bring more transportation, fractionation, terminalling, and export revenue. Energy Transfer expects the deal to add to distributable cash flow per common unit immediately.

Why does Permian gas matter right now? High oil prices have kept drillers busy, and the EIA expects Permian gas output to average 29.2 billion cubic feet per day this year, up 6% from 2025. Pipelines haven't kept up, and Waha hub prices traded below zero from February to early June. 

What do analysts and experts say? Newsletter writer Ron Struthers reiterated a Buy and said the acquisition "could strengthen that long-term income strategy." Twelve of 15 analysts tracked by TipRanks rate the units a Buy, with an average target of US$24.23.

Where does Energy Transfer trade? Energy Transfer moved the listing of its common units and Series I Preferred Units from the New York Stock Exchange to the Texas Stock Exchange, and both began trading there on October 5, 2026.