Expand Energy announced Monday that it has agreed to acquire Twin Eagle Holdings, a privately owned natural gas marketing company, from Five Point Infrastructure in a deal worth $1.25 billion. The purchase is aimed at growing Expand’s marketing operations throughout North America.
The move comes as demand for U.S. natural gas is expected to rise, prompting producers to branch out into marketing and logistics in order to boost profit margins and gain more direct control over how gas is delivered to customers.
Twin Eagle was established in 2010 and operates as an independent marketer of natural gas and power. Its business covers wholesale marketing, asset management, logistics, and data analytics.
Once the transaction closes — expected sometime in the third quarter — Twin Eagle will become a wholly owned subsidiary of Expand Energy. Key members of Twin Eagle’s leadership, including Chief Executive Jeremy Davis, are expected to remain with the company following the acquisition.
As a result of the deal, Expand now projects an additional $750 million in free cash flow per year from its marketing and commercial operations — a 50% increase over its prior target.
Industry analysts say the acquisition would elevate Expand from its current position as North America’s largest natural gas producer to one of the top integrated gas companies on the continent.
RBC analyst Scott Hanold noted that the deal meaningfully strengthens Expand’s marketing and commercial sales capabilities, though he acknowledged the price paid falls on the higher end of the range. “We think this will have a mixed view from investors as the strategy is digested. This is different to gas-producing peers, but a long-term direction we see occurring,” Hanold said.
At present, Twin Eagle markets more than 5 billion cubic feet of natural gas per day and oversees roughly 44 billion cubic feet of storage capacity. Following the merger, that marketing volume is expected to grow to approximately 14 billion cubic feet per day.
Together, the two companies anticipate reaching close to 90% of the natural gas market across the United States and Canada by tapping into key demand centers. Expand plans to finance the purchase using a combination of existing cash reserves and borrowings from its revolving credit facility.
