Kinder Morgan Expands Operations with Strategic Acquisition

Kinder Morgan Expands Operations with Strategic Acquisition

HOUSTON-- Kinder Morgan, Inc. (NYSE: KMI) recently announced exciting news regarding its operational expansion. The company’s subsidiary, Hiland Partners Holdings LLC, has reached an agreement to acquire a natural gas gathering and processing system from Outrigger Energy II LLC. This strategic move, valued at $640 million, underscores Kinder Morgan's commitment to enhancing its service capabilities in the natural gas market.

This acquisition includes a state-of-the-art processing facility with the capacity to handle up to 270 million cubic feet per day (MMcf/d), complemented by a robust 104-mile pipeline designed for high-pressure rich gas gathering. This pipeline further boosts Kinder Morgan's ability to transport supplies efficiently from the Williston Basin region to lucrative high-demand markets. The move is supported by long-term contracts with key customers in the area, assuring service stability amid evolving market conditions.

Strategic Benefits for Kinder Morgan

Tom Dender, President of KMI’s Natural Gas Midstream division, expressed enthusiasm regarding the acquisition. “We’re pleased to be integrating this complementary system with our existing Hiland gas assets to aggregate additional supplies from the Bakken,” he said. This sentiment reflects a broader understanding of the need for strategic growth in response to increasing customer demands.

Moreover, Kinder Morgan anticipates that this acquisition will be immediately accretive to its shareholders. The company forecasts a 2025 Adjusted EBITDA multiple of around 8 times based on a full-year horizon. It’s important to note that the Adjusted EBITDA calculation will account for approximately $20 million of expected cash payments in 2025 resulting from deferred revenue recognition. This financial strategy aims to enhance KMI’s position as a frontrunner in the energy infrastructure sector.

Funding and Future Prospects

To facilitate the acquisition, Kinder Morgan plans to utilize short-term borrowings alongside cash reserves. This approach allows the company to manage its financial resources effectively while minimizing immediate capital expenditure impacts. Importantly, this transaction is anticipated to streamline future capital outlays required for servicing the existing Bakken customer base.

As of now, the transaction awaits regulatory clearance under Hart-Scott-Rodino, with expectations set for closure in the first quarter of 2025. This regulatory step is part of standard procedure for major acquisitions in the energy sector, ensuring compliance and transparency throughout the process.

About Kinder Morgan, Inc.

Kinder Morgan, Inc. (NYSE: KMI) is recognized as one of North America's largest energy infrastructure firms. The company plays a pivotal role in providing reliable and affordable energy solutions, a crucial factor in improving quality of life globally. Their commitment extends to safe and environmentally sustainable energy transportation and storage operations that serve various communities and businesses.

Kinder Morgan operates an extensive network, including approximately 79,000 miles of pipelines and 139 terminals. Their operational capabilities encompass 702 billion cubic feet of working natural gas storage and an annual renewable natural gas generation capacity of about 6.1 billion cubic feet, with further developments ongoing. The company's pipelines transport a diverse range of products including natural gas, refined petroleum products, and renewable fuels, while its terminals facilitate the safe handling and storage of various essential commodities.

About Outrigger Energy II, LLC

Outrigger Energy II LLC is a notable player in the midstream energy sector, owning one of the largest privately held natural gas gathering and processing systems within the Williston Basin. Their business model emphasizes reliability and value-added services to customers, underscored by a strong commitment to safety and environmental stewardship.

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