Kinder Morgan to purchase STX Midstream

The STX Midstream pipeline system includes a set of integrated, large diameter high pressure natural gas pipelines that connect the Eagle Ford basin to key growing Mexico and Gulf Coast demand markets.

STX Midstream includes a 90% interest in the NET Mexico pipeline; MGI Enterprises, a PEMEX affiliate, owns the other 10%. STX Midstream owns and operates Eagle Ford Midstream, a 158 mile residue line connecting the Eagle Ford basin to the Agua Dulce Hub in Nueces County, Texas. Eagle Ford Midstream is connected to multiple pipeline systems, including KMI’s Tennessee Gas Pipeline, Kinder Morgan Tejas Pipeline and Natural Gas Pipeline Company of America.

STX Midstream also owns a 50% interest in Dos Caminos LLC, which is operated by, and the other 50% interest owned by, Howard Energy Partners (HEP). Dos Caminos has placed in service a 62 mile pipeline that connects HEP’s existing midstream pipeline and facilities in Webb County, Texas to KMI’s new Eagle Ford pipeline, which was recently placed in service. The portfolio of assets is highly contracted, with an average contract length over 8 years. Approximately 75% of the business is supported by take-or-pay contracts.

“This is a very attractive acquisition for KMI,” said Sital Mody, KMI President of Natural Gas Pipelines. “STX Midstream nicely complements our existing assets and will enable us to capture incremental opportunities serving LNG, power generation, LDC customers and exports to Mexico.”

KMI expects the investment to be accretive to its shareholders, with the purchase price representing a 2024 EBITDA multiple of 8.6 times and a long-term investment-to-EBITDA multiple of approximately 7.0 – 7.5 times, based on KMI’s financial projections and inclusive of commercial synergies. Initially, it plans to fund the transaction with cash on hand and short-term borrowings, increasing its Net Debt-to-EBITDA ratio by approximately 0.1 times, after including a full year EBITDA contribution from the asset. Based on the company’s longer-term funding plans, it expects this transaction to be neutral to KMI’s balance sheet.

The transaction requires clearance under Hart-Scott-Rodino and is expected to close in 1Q24. A presentation including information relating to this transaction has been posted to the Investor Relations page on KMI’s website.

About Kinder Morgan, Inc.

Kinder Morgan, Inc. is one of the largest energy infrastructure companies in North America. Access to reliable, affordable energy is a critical component for improving lives around the world. The company is committed to providing energy transportation and storage services in a safe, efficient and environmentally responsible manner for the benefit of the people, communities and businesses it serves.

Read the article online at: https://www.worldpipelines.com/business-news/07112023/kinder-morgan-to-purchase-stx-midstream/