DT Midstream Inc. agreed on Sept. 29 to acquire National Grid Plc’s full ownership interests in the Millennium Pipeline as part of the company’s strategy of owning pure-play natural gas assets.

In service since 2008, the Millennium Pipeline is a 263-mile interstate pipeline strategically positioned to deliver Marcellus and Utica gas to utility and power plant markets across New York State and New England.

Headquartered in Detroit, DT Midstream is a founding developer and existing owner of Millennium Pipeline, which is also interconnected with the company’s wholly-owned Bluestone Gathering Lateral Pipeline that has upstream connections to its Susquehanna Gathering System.

“Increasing our ownership in a premium integrated asset like Millennium Pipeline directly aligns with our strategic investment thesis and accelerates our growth plan,” DT Midstream President and CEO David Slater commented in a company release.

Hart Energy September 2022 - DT Midstream Boosts Ownership of Appalachia Gas Pipeline - Millennium Asset Map
The Millennium Pipeline, operated by TC Energy Corp., is designed to deliver over 2 Bcf/d. (Source: DT Midstream Inc.)

Under the terms of the agreement, DT Midstream will pay National Grid about $552 million in cash to acquire its 26.25% ownership interest in the Millennium Pipeline. Upon closing, DT Midstream’s total ownership in Millennium Pipeline will increase to 52.5%.

“This transaction also increases the revenue contribution from our pipeline segment, underpinned by take-or-pay contracts with high credit quality customers,” Slater added.

DT Midstream expects an incremental adjusted EBITDA contribution of $12 million to $14 million in 2022 from the transaction, subject to close timing and other customary adjustments. 

“This transaction will be immediately value accretive and, given the strength of our balance sheet, will be fully funded with cash on hand and available credit capacity,” noted Jeff Jewell, executive vice president and CFO of DT Midstream, in the company release.

The transaction has been approved by DT Midstream’s board of directors and is expected to close in the fourth quarter, subject to regulatory approvals. DT Midstream put the transaction multiple at 10x 2023 adjusted EBITDA.

Lazard is financial adviser and Shearman & Sterling LLP is providing legal counsel to DT Midstream for the transaction.