Outrigger Energy II Completes Sale of Its Williston Basin Midstream System

Rhea-AI Summary

Outrigger Energy II has completed the sale of its Williston Basin midstream system in North Dakota to Hiland Partners Holdings, a Kinder Morgan (NYSE: KMI) subsidiary, for $640 million. The system includes a 270 MMcfd cryogenic gas processing plant, 104 miles of high-pressure gathering pipelines, and 6,720 horsepower of field compression.

The high-pressure gathering system spans Williams and Mountrail Counties and is supported by long-term, fee-based contracts with minimum volume commitments from leading Williston Basin operators. The facility represents North Dakota's largest single-train cryogenic processing facility, constructed during the Covid-19 pandemic.

Positive

• Sale transaction completed for $640 million, providing significant capital return
• System includes North Dakota's largest single-train cryogenic processing facility
• Long-term, fee-based contracts with minimum volume commitments secure steady revenue

Negative

• None.

Insights

Financial Analyst

The $640 million acquisition of Outrigger Energy II's Williston Basin assets represents a strategic expansion of Kinder Morgan's natural gas infrastructure footprint in a key production region. The transaction's structure is particularly noteworthy for several reasons:

The acquired assets include North Dakota's largest single-train cryogenic processing facility (270 MMcfd capacity), which demonstrates significant scale advantages and operational efficiency. The extensive gathering system, spanning 104 miles across Williams and Mountrail Counties, is strategically positioned in core production areas, enhancing the system's long-term utilization potential.

Three key value drivers make this acquisition particularly compelling:

• The long-term, fee-based contracts with minimum volume commitments provide reliable cash flow visibility, reducing exposure to commodity price fluctuations
• The system's strategic location in Williams and Mountrail Counties, prime areas for natural gas production, ensures sustained throughput
• Operational synergies with KMI's existing Hiland Partners assets in the region could drive cost efficiencies and enhanced market connectivity

The timing of this acquisition is opportune, as natural gas infrastructure remains critical for reducing flaring and meeting environmental regulations in the Williston Basin. The modern cryogenic processing facility, completed during the challenging COVID-19 period, represents state-of-the-art technology that should require minimal near-term capital investment.

For KMI shareholders, this transaction strengthens the company's midstream presence in a strategic basin while maintaining its conservative financial approach. The fee-based contract structure aligns with KMI's low-risk business model, potentially contributing to stable dividend coverage ratios and predictable cash flows.

DENVER--(BUSINESS WIRE)-- Outrigger Energy II LLC announced today that it has completed the sale of its midstream system in the Williston Basin of North Dakota to Hiland Partners Holdings LLC, a wholly owned subsidiary of Kinder Morgan, Inc. (NYSE: KMI) for $640 million. Outrigger’s Williston Basin system includes a 270 MMcfd cryogenic gas processing plant, approximately 104 miles of high-pressure, large diameter gathering pipelines and 6,720 horsepower of field compression. Outrigger’s high pressure gathering system extends across Williams and Mountrail Counties receiving gas from multiple high-capacity receipt points and the system is anchored by long-term, fee-based contracts with significant minimum volume commitments from several leading Williston Basin operators.

Dave Keanini, Outrigger’s President & CEO, stated, “The significant midstream system we developed, which includes the largest single-train cryogenic processing facility in North Dakota, is a career highlight. We are very proud of the exceptional results delivered by our team, particularly against the challenge of the Covid-19 pandemic during the construction phase. We appreciate the strong relationships we built with our customers and are confident that Kinder Morgan’s extensive presence and expertise in the basin will provide substantial synergies with the Outrigger system to benefit area operators. Further, we are incredibly grateful for the consistent trust and support of our partners NGP and Brion G. Wise.”

Advisors

Evercore served as lead financial advisor to Outrigger on the transaction. Citi also advised Outrigger. Vinson & Elkins acted as Outrigger’s legal advisor.

About Outrigger Energy II

Outrigger Energy II LLC is a private, full service midstream energy that provides reliable and value-added services to its customers. Outrigger’s core values include promoting safety across all aspects of the company and environmental stewardship within its communities. Outrigger is supported by equity commitments from NGP Energy Capital and an entity affiliated with Brion G. Wise. For more information, please visit www.outriggerenergy.com.

About NGP

NGP is a premier private equity firm that believes energy is essential to progress. Founded in 1988, NGP is moving energy forward by investing in innovation and empowering energy entrepreneurs in natural resources and energy transition. With over $24 billion of cumulative equity commitments, we back portfolio companies focused on responsibly solving and securing the energy needs of today and leading the way to a cleaner, more reliable, more affordable energy future. For more information, visit www.ngpenergy.com.

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Public Relations

(720) 638-7312

info@outriggerenergy.com

Source: Outrigger Energy II LLC

FAQ

How much did Kinder Morgan (KMI) pay for Outrigger Energy II's Williston Basin assets?

Kinder Morgan (KMI) paid $640 million to acquire Outrigger Energy II's Williston Basin midstream system through its subsidiary Hiland Partners Holdings

What assets are included in KMI's Williston Basin acquisition?

The acquisition includes a 270 MMcfd cryogenic gas processing plant, 104 miles of high-pressure gathering pipelines, and 6,720 horsepower of field compression across Williams and Mountrail Counties in North Dakota.

What type of contracts support the Williston Basin system acquired by KMI?

The system is supported by long-term, fee-based contracts with significant minimum volume commitments from several leading Williston Basin operators.

What is the processing capacity of the cryogenic plant KMI acquired in North Dakota?

The cryogenic gas processing plant has a capacity of 270 MMcfd and is the largest single-train cryogenic processing facility in North Dakota.