Kinder Morgan Closes on $640 Million Acquisition of a Natural Gas Gathering and Processing System From Outrigger Energy II

Rhea-AI Summary

Kinder Morgan (NYSE: KMI) has completed its previously announced $640 million acquisition of a natural gas gathering and processing system in North Dakota from Outrigger Energy II The acquired assets include a 270 MMcf/d processing facility and a 104-mile high-pressure rich gas gathering pipeline with 350 MMcf/d capacity, connecting Williston Basin supplies to high-demand markets.

The system is supported by long-term contracts with major basin customers. KMI expects the acquisition to be immediately accretive to shareholders, with a 2025 Adjusted EBITDA multiple of approximately 8 times on a full-year basis, not including about $20 million of expected cash payments in 2025 that receive deferred revenue recognition. The acquisition will reduce future capital expenditures needed for existing Bakken customer growth and complements KMI's existing Hiland gas assets.

Positive

• Immediate accretive effect on shareholder value
• Secured long-term contracts with major customers
• Reduction in future capital expenditures for Bakken growth
• Strategic expansion of transportation and processing capacity
• 8x EBITDA multiple indicates reasonable acquisition valuation

Negative

• Significant upfront capital investment of $640 million
• $20 million in deferred revenue recognition for 2025

Insights

Energy Infrastructure Analyst

This strategic acquisition significantly strengthens Kinder Morgan's position in the Bakken region through several key advantages. The 270 MMcf/d processing facility and 350 MMcf/d gathering pipeline provide immediate scale benefits and operational synergies with KMI's existing Hiland assets. The infrastructure's strategic location in the Williston Basin connects supply to high-demand markets, enhancing KMI's competitive position in the region.

The deal's financial structure reveals careful strategic planning. The 8x EBITDA multiple is particularly attractive in the current market environment, where midstream assets typically trade at 10-12x multiples. The additional $20 million in deferred revenue recognition for 2025 effectively reduces the actual acquisition cost, improving the return profile. The long-term contracts with major customers provide revenue stability and reduce volume risk, a important factor in midstream operations.

The transaction's most compelling aspect lies in its capital efficiency. By reducing future capital expenditure requirements for existing customer growth, KMI optimizes its capital allocation while expanding capacity. This approach allows for organic growth without additional major infrastructure investments, potentially improving return on invested capital (ROIC) metrics.

The acquisition reflects broader industry consolidation trends in midstream energy infrastructure, where scale and operational efficiency are increasingly critical. The integration of these assets strengthens KMI's competitive moat in the Bakken region, providing enhanced negotiating power with both upstream producers and downstream customers. The expanded capacity and processing capabilities position KMI to capture growing natural gas volumes in the Williston Basin, particularly as operators focus on reducing flaring and maximizing natural gas capture.

Acquired assets complementary to existing Hiland gas assets in the Bakken

HOUSTON--(BUSINESS WIRE)-- Kinder Morgan, Inc. (NYSE: KMI) today announced that its subsidiary, Hiland Partners Holdings LLC, closed on its previously announced $640 million acquisition of a natural gas gathering and processing system in North Dakota from Outrigger Energy II LLC. 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.

“We are pleased to have completed this strategic acquisition and to start integrating these assets with our existing Hiland gas footprint,” said KMI Natural Gas Midstream President Tom Dender. “This acquisition expands our transportation and processing services, allowing us to meet the growing needs of our customers.”

KMI expects the acquisition to be immediately accretive to its shareholders, with a 2025 Adjusted EBITDA multiple of approximately 8 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. With this transaction, KMI expects to reduce future capital expenditures needed to accommodate the growth of its existing Bakken customers.

About Kinder Morgan, Inc.

Kinder Morgan, Inc. (NYSE: KMI) 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. We are 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 we serve. We own an interest in or operate approximately 79,000 miles of pipelines, 139 terminals, 702 Bcf of working natural gas storage capacity and have renewable natural gas generation capacity of approximately 6.1 Bcf per year with an additional 0.8 Bcf in development. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO₂, renewable fuels and other products, and our terminals store and handle various commodities including gasoline, diesel fuel, jet fuel, chemicals, metals, petroleum coke, and ethanol and other renewable fuels and feedstocks. Learn more about our work advancing energy solutions on the lower carbon initiatives page at www.kindermorgan.com.

Important Information Relating to Forward-Looking Statements

This news release includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. Generally, the words “expects,” “believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements in this news release include express or implied statements concerning the transaction, including the extent and timing of anticipated benefits to KMI’s business and stockholders. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although KMI believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance as to when or if any such forward-looking statements will materialize nor their ultimate impact on our operations or financial condition. Important factors that could cause actual results to differ materially from those expressed in or implied by these forward-looking statements, the timing and extent of changes in the supply of and demand for the products we transport and handle, and the other risks and uncertainties described in KMI’s reports filed with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K for the year-ended December 31, 2024 (under the headings “Risk Factors” and “Information Regarding Forward-Looking Statements” and elsewhere) and its subsequent reports, which are available through the SEC’s EDGAR system at www.sec.gov and on our website at ir.kindermorgan.com. Forward-looking statements speak only as of the date they were made, and except to the extent required by law, KMI undertakes no obligation to update any forward-looking statement because of new information, future events or other factors. Because of these risks and uncertainties, readers should not place undue reliance on these forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250218509537/en/

KINDER MORGAN CONTACTS

Media Relations

newsroom@kindermorgan.com



Investor Relations

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www.kindermorgan.com

Source: Kinder Morgan, Inc.

FAQ

What is the value of Kinder Morgan's (KMI) acquisition from Outrigger Energy II?

Kinder Morgan's acquisition from Outrigger Energy II is valued at $640 million.

What assets are included in KMI's North Dakota acquisition?

The acquisition includes a 270 MMcf/d processing facility and a 104-mile high-pressure rich gas gathering pipeline with 350 MMcf/d capacity in the Williston Basin area.

What is the expected EBITDA multiple for KMI's Outrigger acquisition in 2025?

The acquisition is expected to have a 2025 Adjusted EBITDA multiple of approximately 8 times on a full-year basis.

How will the Outrigger acquisition impact KMI's future capital expenditures?

The acquisition is expected to reduce future capital expenditures needed to accommodate the growth of KMI's existing Bakken customers.

What are the deferred revenue expectations for KMI's Outrigger acquisition in 2025?

The acquisition includes approximately $20 million of expected cash payments in 2025 that will receive deferred revenue recognition.