Kinder Morgan Inc. has agreed to purchase NextEra Energy Partners LP's South Texas natural gas pipeline assets for a cash sum of $1.815 billion.
The acquisition solidifies Kinder Morgan's presence in the energy infrastructure sector, with a particular focus on South Texas and the connecting markets through the STX Midstream pipeline system, which acts as a vital link between the Eagle Ford Basin and the lucrative Mexican and US Gulf Coast markets.
The strategic acquisition includes a significant 90% interest in the NET Mexico pipeline and a 50% stake in Dos Caminos LLC, as confirmed by Kinder Morgan in their announcement on Monday, November 6, marking Kinder Morgan's sixth acquisition in the past three years.
The latest acquisition emphasises the industry's trend, where pipeline operators are increasingly turning to acquisitions to expand their operations due to the growing public opposition and regulatory challenges, which have made it progressively more challenging to construct new conduits.
Additionally, the ongoing shift towards renewable energy sources poses a potential long-term challenge to the demand for additional pipelines as companies work toward a more sustainable and greener future.
In response to these market dynamics, NextEra Energy Partners had previously declared its intent to divest its gas pipelines, shifting their focus towards renewables. The move aligns with US President Joe Biden's landmark climate law, which has spurred increased investment in the renewable energy sector.
The closing of this transaction is anticipated during the first quarter, subject to regulatory approvals, according to the official statement from Kinder Morgan. This acquisition reaffirms Kinder Morgan's commitment to expanding its energy infrastructure footprint and adapting to the evolving landscape of the energy industry.
Kinder Morgan's after-market trading saw a 0.4% decrease, while NextEra Energy Partners experienced a 0.6% increase in its stock price following the announcement.