Kinder Morgan Scoops Up STX Midstream for $1.8 Billion

The deal will add over 460 miles of pipeline to company’s assets upon closing early next year.

STX Midstream owns and operates several Eagle Ford area natural gas transportation pipelines.

Kinder Morgan has agreed to acquire NextEra Energy Partner’s South Texas assets, STX Midstream, for $1.815 billion in cash. The STX Midstream pipeline system includes a set of integrated, large-diameter high-pressure natural gas pipelines that connect the Eagle Ford Basin to Mexico and Gulf Coast markets.

STX Midstream includes a 90% interest in the NET Mexico pipeline; MGI Enterprises, a Pemex affiliate, owns the other 10%. Overall, Kinder Morgan will receive 462 miles of pipeline with 4.9 Bcf/D of transport capacity.

STX Midstream owns and operates Eagle Ford Midstream, a 158-mile residue line connecting the Eagle Ford Basin to the Agua Dulce Hub in Nueces County, Texas. Eagle Ford Midstream is connected to multiple pipeline systems, including KMI’s Tennessee Gas Pipeline, Kinder Morgan Tejas Pipeline, and Natural Gas Pipeline Company of America.

STX Midstream also owns a 50% interest in Dos Caminos LLC, which is operated by, and the other 50% interest owned by, Howard Energy Partners (HEP). Dos Caminos has placed in service a 62-mile pipeline that connects HEP’s existing midstream pipeline and facilities in Webb County, Texas, to KMI’s new Eagle Ford pipeline, which was recently placed in service.

The portfolio of assets has an overall average contract length over 8 years, with approximately 75% of the business supported by take-or-pay contracts.

“This is a very attractive acquisition for KMI,” said Sital Mody, KMI president of natural gas pipelines. “STX Midstream nicely complements our existing assets and will enable us to capture incremental opportunities serving LNG, power generation, LDC customers, and exports to Mexico.”

KMI expects the investment to be accretive to its shareholders. Initially, the company plans to fund the transaction with cash on hand and short-term borrowings.

The transaction is expected to close in the first quarter of 2024.