Energy Transfer Weighs Sale of Rover Pipeline Stake
A worker walks past pipework at a liquefied natural gas (LNG) transfer pier facility at on Zhoushan Island, Zhejiang province, China. (Photographer: Qilai Shen/Bloomberg)

Energy Transfer Weighs Sale of Rover Pipeline Stake

(Bloomberg) -- Energy Transfer LP, the U.S. pipeline giant controlled by billionaire Kelcy Warren, is weighing the sale of its 33% stake in a conduit that carries Appalachian natural gas to customers across the Midwest, according to people familiar with the matter.

The Dallas-based pipeline operator has hired an adviser to pursue a potential sale of its operated interest in the Rover pipeline, said the people, who asked not to be named because the information isn’t public. The stake could fetch as much as $2.5 billion, one of the people said.

No decision has been made and Energy Transfer could opt not to sell, the people said. A representative for the company declined to comment. Energy Transfer rose 0.6% to close at $14.91 a share.

Energy Transfer Weighs Sale of Rover Pipeline Stake

Rover is 713 miles (1,148 kilometers) long and can shuttle 3.25 billion cubic feet of gas daily to customers across Ohio and Michigan, and as far away as Ontario. The project was originally expected to cost $4.2 billion and entered full service last year after a series of delays and construction missteps, including the bulldozing of a historic house in Ohio that the company had said it was buying for office space.

When the project came online, gas drillers got relief from bottlenecks that had plagued the Marcellus and Utica shale fields in Appalachia, where a production boom aggravated shipping constraints. Rover can handle as much as 10% of total Appalachian gas output.

Energy Transfer Weighs Sale of Rover Pipeline Stake

Energy Transfer sold a 32% stake in Rover to funds managed by Blackstone for about $1.57 billion in 2017. Together, Energy Transfer and Blackstone control 65% of Rover through an entity called “HoldCo,” according to a regulatory filing. Traverse Midstream, formed in 2014 by a former affiliate of private equity firm NGP Energy Capital Management, owns the remaining 35%.

Proceeds from a sale of the Rover stake could be used by Energy Transfer to make an acquisition. The company is among those looking at a 20% stake in a crude-oil export project in Corpus Christi, Texas, a person familiar with the matter said last month.

“We kiss a lot of frogs looking for a prince,” Warren said during a conference call in November. “We are working it hard. I will tell you, though, we are not finding any deals.”

©2019 Bloomberg L.P.

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