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Delek Logistics Partners, LP DKL recently announced the closing of Gravity Water Intermediate Holdings’ acquisition, setting a milestone for its leadership in integrated crude, gas and water midstream services in the Permian Basin. With the completion of this deal, the partnership provides the best combination of yield and growth in the midstream sector and brings exceptional value and growth opportunities for its stakeholders.
Overview of DKL’s Acquisition Deal
The news of the acquisition of Gravity Water by Delek Logistics, currently carrying a Zacks Rank #5 (Strong Sell),was initially announced on Dec. 12, 2024, for a total consideration of $285 million, where $200 million was to be paid in cash and the remaining via 2.175 million DKL units.
Under the terms of the deal, Gravity Water divested its midstream assets, which include a system of 200-plus miles of permanent pipeline, 46 saltwater disposal facilities and 14 freshwater facilities with over 6 million bbl of storage capacity. However, it retained ownership and operation of its power infrastructure assets.
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Expanding DKL’s Operations in Key Regions
The Gravity Water acquisition aligns with DKL’s recent purchase of H2O Midstream and creates an integrated infrastructure for crude and produced water gathering and disposal offerings in the Midland Basin. The deal will also provide synergetic benefits through cost and commodity sale optimization. Gravity’s operations in the Permian Basin and the Bakken region will bolster DKL's ability to serve third-party customers.
Investors can also monitor some better-ranked midstream companies that are involved in energy transportation services like The Williams Companies, Inc. WMB, Pembina Pipeline Corporation PBA and TC Energy Corporation TRP.
Oklahoma-based The Williams Companies is a premier energy infrastructure provider in North America that boasts a widespread pipeline system of more than 33,000 miles and is also one of the largest domestic transporters of natural gas by volume. With the recent launch of Transco's Southside Reliability Enhancement, the company boosted its energy capacity and successfully delivered gas to more than 2 million homes.
Calgary, Alberta-based Pembina Pipeline Corporation is a Canada-based, vertically integrated operator of energy infrastructure assets. The company recently bolstered its portfolio by acquiring a 50% stake in Whitecap Resources Inc.‘s Kaybob complex natural gas processing facility.