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.
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.
Recommended Reading
Supply Disruptions Ahead as Canadian Rail Workers Vote for Strike
2024-05-01 - The union, representing more than 9,000 employees at Canadian National Railway and Canadian Pacific Kansas City, announced that 95% of its members approved of a strike, which could happen as early as May 22.
Vision RNG Expands Leadership Team
2024-05-01 - Vision RNG named Adam Beck as vice president of project execution, Doug Prechter as vice president of finance and Beckie Dille as HR manager.
OGInterview: Building EIV Capital’s Midstream Investment Strategy
2024-05-01 - Midstream-focused EIV Capital has added non-operated assets and transition projects to its portfolio as a sign of the times.
NOG Lenders Expand Revolving Credit Facility to $1.5B
2024-04-30 - Northern Oil and Gas’ semi-annual borrowing-base redetermination left its reserved-based lending unchanged at $1.8 billion.
Imperial Oil Names Exxon’s Gomez-Smith as Upstream Senior VP
2024-04-30 - Cheryl Gomez-Smith, currently director of safety and risk at Exxon Mobil’s global operations and sustainability business, will join Imperial Oil in May.