NextEra Energy wraps up $1.8bn sale of natural gas pipeline portfolio to Kinder Morgan

NextEra Energy Partners, LP (NYSE: NEP) has officially closed a major deal in the energy sector, selling its Texas natural gas pipeline portfolio to Kinder Morgan, Inc. (NYSE: KMI) for a staggering $1.815 billion. This transaction marks a pivotal moment in NextEra Energy Partners’ business strategy.

John Ketchum, chairman and chief executive officer of NextEra Energy Partners, emphasized the importance of this sale in the company’s transition plans. “This sale is a crucial step towards our strategic objectives, and it provides us with the necessary funds to address our future financing plans,” Ketchum stated.

The portfolio consists of seven pipelines primarily serving Mexico, as well as power producers and municipalities in South Texas. The total adjusted EBITDA for the Texas natural gas pipeline portfolio for the calendar year 2023 is projected to be around $180 million. The sale represents about a 10 times multiple on this estimated EBITDA.

NextEra Energy Partners received net proceeds of $1.4 billion after settling approximately $430 million in project-related debt and associated interest rate swaps. This substantial capital injection will be instrumental in fulfilling the company’s financing objectives. NextEra Energy Partners has already paid off the STX Midstream convertible equity portfolio financing and plans to use the remaining proceeds for the NEP Renewables II buyouts scheduled for June 2024 and June 2025.

Kinder Morgan’s acquisition of the natural gas pipeline portfolio from NextEra Energy Partners is a significant development in the energy sector, highlighting the ongoing consolidation and strategic realignments in this vital industry.