NextEra Energy completes NET Midstream acquisition for $2.1bn

US-based renewable energy developer NextEra Energy Partners has completed its previously announced acquisition of natural gas pipeline company NET Midstream in a transaction worth about $2.1bn.

The transaction will add NET Midstream’s portfolio of seven long-term contracted natural gas pipeline assets that are located in Texas.

NextEra Energy Partners chairman and CEO Jim Robo said: "The NET Midstream acquisition establishes NextEra Energy Partners’ presence in the long-term contracted natural gas pipeline space and complements the partnership’s existing renewables portfolio by reducing the impact of resource variability on our total portfolio."

The pipelines serve power producers and municipalities in South Texas, processing plants and producers in the Eagle Ford Shale, and residential, commercial and industrial customers in Houston.

The NET Mexico Pipeline, which is claimed to be the largest pipeline in the portfolio, is 10% owned by a subsidiary of Pemex and provides a critical source of natural gas transportation.

The three largest pipelines in the portfolio, upon completion, are expected to provide about one billion ft³ of additional contracted volumes per day.

According to NextEra Energy, the acquisition will increase the company’s capacity to transport about three billion ft³ per day of gas a day.

Of the total transaction value, roughly $500m will be deferred, with $200m payable 18 months after closing and up to $200m payable for certain expansion projects.

About $100m of capital expenditures will be used for the expansion projects.

The company plans to finance $300m for the expansion projects with incremental future debt.

The acquisition is expected to contribute adjusted EBITDA and CAFD of about $145m to $155m and $110m to $120m, respectively, on an annual run rate basis as of 31 December.