Kinder Morgan announced that its subsidiary Hiland Partners Holdings, has agreed to purchase a natural gas gathering and processing system in North Dakota from Outrigger Energy II for $640 million. This acquisition includes a 270 million cubic feet per day (MMcf/d) processing facility and a 104-mile, large-diameter, high-pressure rich gas gathering header pipeline with 350 MMcf/d of capacity connecting supplies from the Williston Basin area to high-demand markets. The gathering and processing system is backed by long-term contracts with commitments from major customers in the basin.
KMI expects this deal to be immediately accretive to its shareholders, with a 2025 Adjusted EBITDA multiple of approximately 8 times on a full-year basis. And adjusted EBITDA does not include roughly $20 million of expected cash payments in 2025 that receive deferred revenue recognition. With this deal, KMI expects to reduce future capital expenditures needed to accommodate the growth of its existing Bakken customers. Initially, KMI plans to fund the transaction with short-term borrowings and cash on hand.
This deal requires clearance, and it is expected to close in the first quarter of 2025.
KEY QUOTE:
“We’re pleased to be integrating this complementary system with our existing Hiland gas assets to aggregate additional supplies from the Bakken. This strategic acquisition allows us to efficiently expand our footprint and provide incremental transportation and processing services to meet the growing needs of our customers.”
– KMI Natural Gas Midstream President Tom Dender
