KMI to Acquire Midstream Gas Assets in Williston Basin from Outrigger

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KMI to Acquire Midstream Gas Assets in Williston Basin from Outrigger

Kinder Morgan Inc. (KMI) has agreed to buy a natural gas gathering and processing system in North Dakota from Outrigger Energy II LLC for $640 million. The acquisition includes a processing facility with a capacity of 270 million cubic feet a day (MMcfd) and a 104-mile, large-diameter, high-pressure rich gas gathering header pipeline with 350 […]

Kinder Morgan Inc. (KMI) has agreed to buy a natural gas gathering and processing system in North Dakota from Outrigger Energy II LLC for $640 million.

The acquisition includes a processing facility with a capacity of 270 million cubic feet a day (MMcfd) and a 104-mile, large-diameter, high-pressure rich gas gathering header pipeline with 350 MMcfd of capacity, KMI said in an online statement.

The pipeline carries supplies from the Williston Basin area to “high-demand markets”, the Houston, Texas-based company added. The assets have long-term contracts with major customers in the basin, KMI said.

“We’re pleased to be integrating this complementary system with our existing Hiland gas assets to aggregate additional supplies from the Bakken”, said Tom Dender, president for midstream natural gas at KMI. “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”.

The company plans to fund the purchase, signed through subsidiary Hiland Partners Holdings LLC, with short-term borrowings and cash on hand.

Subject to clearance under United States anti-trust reviews, the transaction is expected to close in the first quarter of 2025.

The company added, “KMI expects the acquisition to be immediately accretive to its shareholders, with a 2025 Adjusted EBITDA multiple of approximately eight times on a full-year basis”.

“Adjusted EBITDA does not include approximately $20 million of expected cash payments in 2025 that receive deferred revenue recognition”, it said. “With this transaction, KMI expects to reduce future capital expenditures needed to accommodate the growth of its existing Bakken customers”.

Earlier KMI said it expected its 2025 adjusted EBITDA and adjusted earnings per share to grow four percent and eight percent respectively against 2024, driven by its gas pipeline segment and energy transition ventures.

It projected an annualized dividend of $1.17 for this year, which would mark the eighth year in a row it has raised its dividend.

“Our end-of-year 2025 net debt-to-adjusted EBITDA ratio is forecast to be 3.8 times, which is in the lower part of our 3.5x-4.5x leverage target range and provides good capacity for additional opportunistic investment”, chief executive Kim Dang said in a statement December 9, 2024.

KMI president Tom Martin said then, “We expect to continue benefiting from strong natural gas market fundamentals driving growth on our existing natural gas transportation and storage assets, as well as creating expansion opportunities”.

“Overall, our base business is relatively flat with expansion projects in our Natural Gas Pipelines segment and Energy Transition Ventures group as the primary growth drivers”, Martin added.

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