Kinder to Buy NextEra’s South Texas Gas Pipes for $1.8 Billion

By Bloomberg

Nov 06, 2023

image is BloomburgMedia_S3Q1NVDWLU6801_07-11-2023_11-00-15_638349120000000000.jpg

A section of an oil pipeline sits on blocking during construction in the Permian Basin near Pyote, Texas, U.S., on Friday, March 2, 2018. Chevron, the world's third-largest publicly traded oil producer, is spending $3.3 billion this year in the Permian and an additional $1 billion in other shale basins. Its expansion will further bolster U.S. oil output, which already exceeds 10 million barrels a day, surpassing the record set in 1970. Photographer: Daniel Acker/Bloomberg

(Bloomberg) -- Kinder Morgan Inc. agreed to buy NextEra Energy Partners LP’s South Texas natural gas pipeline assets for $1.815 billion in cash.

The STX Midstream pipeline system connects the Eagle Ford Basin to Mexican and US Gulf Coast markets. The assets include a 90% interest in the NET Mexico pipeline and a 50% stake in Dos Caminos LLC, Kinder Morgan said Monday.

The deal is Kinder’s sixth purchase in the past three years. Pipeline operators are increasingly turning to acquisitions for growth as public opposition and regulatory hurdles make it more difficult to build new conduits. The transition to renewable energy, meanwhile, threatens the long-term need for additional pipelines.

NextEra Energy Partners announced earlier this year that it would sell its gas pipelines to focus on renewables as US President Joe Biden’s landmark climate law boosts investment in the sector.

The Kinder transaction is expected to close during the first quarter, pending regulatory clearance, according to the statement. Kinder Morgan fell 0.4% in after-market trading; NextEra Energy Partners rose 0.6%.

(Adds detail on NextEra’s strategy in fourth paragraph.)

By Elizabeth Elkin