NW Natural Holdings Completes Acquisition of SiEnergy

Rhea-AI Summary

Northwest Natural Holding Company (NYSE: NWN) has completed its acquisition of SiEnergy Operating, one of the fastest-growing natural gas distribution utilities in the nation. The acquisition, initially announced in November 2024, expands NWN's presence in the Texas Triangle region, serving approximately 70,000 residential and commercial customers in Houston, Dallas, and Austin metropolitan areas.

SiEnergy is expected to have a rate base of $247 million as of December 31, 2024, with impressive growth metrics including a 26% compound annual rate base growth and 22% customer growth over the five years ending in 2024. The company has achieved organic growth by providing infrastructure to residential and commercial developments in high-growth areas.

Positive

• Expected rate base of $247 million by end of 2024
• Strong 26% compound annual rate base growth over past 5 years
• Robust 22% compound annual customer growth over past 5 years
• Strategic expansion into high-growth Texas Triangle market
• 70,000 existing residential and commercial customers

Negative

• None.

Insights

Financial Analyst

The acquisition of SiEnergy represents a strategic expansion that significantly enhances NWN's growth trajectory. With a $247 million rate base and impressive compound annual growth rates of 26% in rate base and 22% in customer base over five years, SiEnergy brings substantial value to NWN's portfolio. The Texas Triangle region is experiencing robust economic expansion and this acquisition positions NWN to capitalize on high-growth residential and commercial development opportunities. The deal's structure enables immediate rate base accretion and provides a platform for organic growth in one of America's most dynamic economic regions. The integration of SiEnergy's 70,000 customers significantly expands NWN's customer base and geographic diversification, reducing regulatory risk through multi-state operations. This acquisition aligns with the broader utility sector trend of geographic expansion and consolidation to achieve economies of scale and enhance shareholder value.

Market Research Analyst

The Texas Triangle market represents a strategic goldmine for utility operators. Houston, Dallas and Austin are experiencing unprecedented population growth, driven by business relocations and economic expansion. The region's pro-business environment and lower cost of living continue to attract both residential and commercial development. SiEnergy's established presence in these high-growth corridors provides NWN with immediate market penetration and a strong foundation for future expansion. The 22% compound annual customer growth demonstrates the robust demand for natural gas infrastructure in these developing areas. This acquisition transforms NWN from a primarily Pacific Northwest operator into a multi-regional utility with significant exposure to one of the nation's fastest-growing markets, potentially warranting a multiple re-rating by investors.

Utility Infrastructure Expert

SiEnergy's business model of providing infrastructure to new developments in high-growth areas is particularly valuable in the current market environment. The company's 26% rate base growth indicates strong execution in capturing development opportunities and efficiently deploying capital. The Texas utility regulatory framework is generally considered favorable for investors, with mechanisms that support timely cost recovery and reasonable returns on infrastructure investments. The integration of SiEnergy into NWN's operations should create operational synergies and knowledge-sharing opportunities, particularly in areas of infrastructure development and customer service. The acquisition also diversifies NWN's weather risk profile by adding exposure to the warmer Texas climate, which could help stabilize seasonal earnings patterns.

Expands NWN’s presence in Texas with a rapidly growing gas utility

PORTLAND, Ore.--(BUSINESS WIRE)-- Northwest Natural Holding Company (NYSE: NWN) (NW Natural Holdings) today announced the closing of its acquisition of SiEnergy Operating, LLC (SiEnergy or the Company) from SiEnergy Capital Partners, LLC (an affiliate of Ridgewood Infrastructure). This marks the successful completion of a strategic acquisition announced in November 2024.

SiEnergy is one of the fastest growing natural gas distribution utilities in the nation, serving approximately 70,000 residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin (known as the Texas Triangle). SiEnergy has grown organically by providing infrastructure to residential and commercial developments in high-growth areas. As previously announced, SiEnergy is expected to have approximately $247 million in rate base as of Dec. 31, 2024 and to have achieved rate base and customer growth of 26% and 22% compounded annually, respectively, over the last five years ending in 2024.

“We are pleased to officially welcome SiEnergy to NW Natural Holdings,” said David H. Anderson, CEO of NW Natural Holdings. “I’m excited about the opportunities SiEnergy is pursuing, our shared values, and our combined capabilities. SiEnergy is well positioned for continued growth as communities and new developments in the Texas Triangle continue to expand.”

"Joining NW Natural Holdings reflects an important milestone for our company,” said June Dively, president of SiEnergy. “I’m looking forward to being part of a strong and growing company and leading the SiEnergy team in the next phase of expansion."

“We are excited about the long-term value creation anticipated from this acquisition,” said Justin B. Palfreyman, president of NW Natural Holdings. "Through this transaction, we are increasing our presence in Texas, creating more opportunities for organic growth, and setting the stage for future growth.”

About NW Natural Holdings

Northwest Natural Holding Company, (NYSE: NWN) (NW Natural Holdings), is headquartered in Portland, Oregon and has been doing business for over 165 years. It owns Northwest Natural Gas Company (NW Natural), SiEnergy Operating, LLC (SiEnergy), NW Natural Water Company (NW Natural Water), NW Natural Renewables Holdings (NW Natural Renewables), and other business interests.

NW Natural Holdings provides critical energy and delivers essential water and wastewater services to nearly one million customers across six states. We have a longstanding commitment to safety, environmental stewardship and the energy transition, and taking care of our employees and communities. NW Natural Holdings was recognized by Ethisphere® for three years running as one of the World’s Most Ethical Companies®. NW Natural consistently leads the industry with high J.D. Power & Associates customer satisfaction scores. Learn more in our latest Community and Sustainability Report.

NW Natural is a local distribution company that currently provides natural gas service to approximately 2 million people in more than 140 communities through more than 800,000 meters in Oregon and Southwest Washington with one of the most modern pipeline systems in the nation. NW Natural owns and operates 21.6 Bcf of underground gas storage capacity in Oregon.

SiEnergy is one of the fastest growing natural gas distribution utilities in the nation, serving approximately 70,000 customers in the greater metropolitan areas of Houston, Dallas, and Austin, Texas.

NW Natural Water provides water distribution and wastewater services to communities throughout the Pacific Northwest, Texas, Arizona, and California. Today NW Natural Water serves over 189,000 people through approximately 76,100 meters. Learn more about our water business.

NW Natural Renewables is committed to leading in the energy transition by providing renewable fuels to support decarbonization in the utility, commercial, industrial and transportation sectors. Learn more about our renewable business.

Additional information is available at nwnaturalholdings.com.

“World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC

Forward-Looking Statements

This press release, and other presentations made by NW Natural Holdings from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," “continues,” “could,” "intends," "plans," "seeks," "believes," "estimates," "expects," "will" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, estimates, expectations, forecasts, outlook, timing, goals, visions, strategies, commitments, future events, financial positions, acquisition strategy, acquisitions and integration thereof, investments, valuations, timing and amount of capital expenditures, rate base growth, strategic fit, performance, risks, risk profile, stability, the likelihood and success associated with any transaction, customer and business growth, capabilities, reputation, growth opportunities, weather, customer rates or rate recovery, investment strategy and financial effects of acquisitions, shareholder return and value, financial results, including estimated income, availability and sources of liquidity, capital markets, financing transactions, debt or equity issuances, expenses, positions, revenues, returns, cost of capital, timing, and earnings, earnings guidance and estimated future growth rates, regulatory strategy, performance, timing, outcome, or effects of regulatory proceedings or mechanisms or approvals, accounting treatment of future events, economic and political conditions, effects of legislation or changes in laws or regulations, inflation, geopolitical uncertainty, and other statements that are other than statements of historical facts.

Forward-looking statements are based on current expectations and assumptions regarding its business, the economy, geopolitical factors, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. You are therefore cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future operational, economic or financial performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the quarterly reports filed thereafter, which, among others, outline legal, regulatory and legislative risks, public health risks, financial, macroeconomic and geopolitical risks, growth and strategic risks, operational risks, business continuity and technology risks, environmental risks and risks related to our water and renewables businesses.

All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of NW Natural Holdings or NW Natural, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and NW Natural Holdings and NW Natural undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. New factors emerge from time to time and it is not possible to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250108052203/en/

Investor Contact:

Nikki Sparley

Phone: 503-721-2530

Email: nikki.sparley@nwnatural.com

Media Contact:

David Roy

Phone: 503-610-7157

Email: david.roy@nwnatural.com

Source: NW Natural

FAQ

What is the expected rate base for SiEnergy after NWN's acquisition in 2024?

SiEnergy is expected to have approximately $247 million in rate base as of December 31, 2024.

How many customers does SiEnergy serve in the Texas Triangle region?

SiEnergy serves approximately 70,000 residential and commercial customers in the Houston, Dallas, and Austin metropolitan areas.

What is SiEnergy's customer growth rate over the past five years?

SiEnergy has achieved a 22% compound annual customer growth rate over the five years ending in 2024.

Which geographic markets does NWN gain access to through the SiEnergy acquisition?

Through this acquisition, NWN gains access to the Texas Triangle region, specifically the greater metropolitan areas of Houston, Dallas, and Austin.

What is SiEnergy's rate base growth rate over the past five years?

SiEnergy has achieved a 26% compound annual rate base growth over the five years ending in 2024.