Kinder Morgan’s acquisition of NextEra Energy’s assets in South Texas solidifies its pipeline network in South Texas. (Source: Shutterstock)
Kinder Morgan (KMI) announced Dec. 28 the completion of its $1.815 billion acquisition of NextEra Energy’s assets in South Texas, according to a press release.
Kinder Morgan acquired assets including a 462-mile network of large-diameter, high-pressure natural gas pipelines that connect the Eagle Ford Shale to markets along the Gulf Coast and in Mexico. The deal was announced Nov. 6.
The deal was announced Nov. 6. KMI CEO Kim Dang had indicated before the purchase that the company was looking to add to its network to support an expanding natural gas market. NextEra’s company leadership has been transitioning into a fully renewables-based business.
KMI CEO Kim Dang had indicated before the purchase that the company was looking to add to its network to support an expanding natural gas market. NextEra’s company leadership has been transitioning into a fully renewables-based business.
KMI’s acquisition includes a 90% interest in the NET Mexico pipeline, with the remaining 10% owned by MGI, a PEMEX affiliate. The purchase also incorporates Eagle Ford Midstream and a 50% interest in Dos Caminos LLC; Howard Energy Partners also owns a 50% stake.
The assets are highly contracted, with an average contract length of more than eight years, KMI said in a press release. Approximately 75% of the business is supported by take-or-pay contracts.
“We are pleased to add these assets to our natural gas portfolio to serve growing LNG, industrial, Mexico export and power generation demand markets on the U.S. Gulf Coast,” said KMI President of Natural Gas Pipelines Sital Mody.
KMI said the acquisition was expected to be accretive to its preliminary 2024 budget with the purchase price equal to 8.6x 2024 EBITDA with a long-term investment-to-EBITDA multiple of approximately 7.0x to 7.5x, inclusive of commercial synergies.
The company plans to fund the transaction with cash on hand and short-term borrowings, increasing KMI’s expected net debt-to-adjusted EBITDA ratio for 2024 by approximately 0.1x after including full-year adjusted EBITDA contributions from the asset.
Recommended Reading
Pembina Pipeline Enters Ethane-Supply Agreement, Slow Walks LNG Project
2024-02-26 - Canadian midstream company Pembina Pipeline also said it would hold off on new LNG terminal decision in a fourth quarter earnings call.
Waha NatGas Prices Go Negative
2024-03-14 - An Enterprise Partners executive said conditions make for a strong LNG export market at an industry lunch on March 14.
EQT CEO: Biden's LNG Pause Mirrors Midstream ‘Playbook’ of Delay, Doubt
2024-02-06 - At a Congressional hearing, EQT CEO Toby Rice blasted the Biden administration and said the same tactics used to stifle pipeline construction—by introducing delays and uncertainty—appear to be behind President Joe Biden’s pause on LNG terminal permitting.
Williams Beats 2023 Expectations, Touts Natgas Infrastructure Additions
2024-02-14 - Williams to continue developing natural gas infrastructure in 2024 with growth capex expected to top $1.45 billion.
Wayangankar: Golden Era for US Natural Gas Storage – Version 2.0
2024-04-19 - While the current resurgence in gas storage is reminiscent of the 2000s —an era that saw ~400 Bcf of storage capacity additions — the market drivers providing the tailwinds today are drastically different from that cycle.