Kinder Morgan, Inc. announced that its subsidiary, Hiland Partners Holdings LLC, has agreed to purchase a natural gas gathering and processing system in North Dakota from Outrigger Energy II LLC for $640 million. The 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 the acquisition to be immediately accretive to its shareholders, with an Adjusted EBITDA multiple of approximately 8 times on a full-year basis. Adjusted EBITDA does not include approximately $20 million of expected cash payments that receive deferred revenue recognition. With this transaction, 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.
Courtesy of Kinder Morgan.