Kinder Morgan to Purchase Renewable Natural Gas Developer Kinetrex Energy
July 16 2021 - 7:30AM
Business Wire
$310 million acquisition includes two
small-scale, domestic LNG production and fueling facilities, a 50%
interest in a landfill RNG facility, and three additional RNG
facilities with signed commercial arrangements
Kinder Morgan, Inc. (NYSE: KMI) today announced it has agreed to
acquire Indianapolis-based Kinetrex Energy from an affiliate of
Parallel49 Equity. Kinetrex is the leading supplier of liquefied
natural gas (LNG) in the Midwest and a rapidly growing player in
producing and supplying renewable natural gas (RNG) under long-term
contracts to transportation service providers.
Kinetrex has a 50% interest in the largest RNG facility in
Indiana as well as signed commercial agreements to begin
construction on three additional landfill-based RNG facilities.
Once operational next year, total annual RNG production from the
four sites is estimated to be over four billion cubic feet. RNG is
derived from abundant renewable sources, including organic waste in
landfills, wastewater treatment plants and agricultural operations.
By capturing methane produced from the decomposition of organic
waste, the RNG production process reduces or eliminates greenhouse
gas emissions. Kinetrex’s unique full-service platform provides
outstanding value for its customers and host landfills. The
transaction requires regulatory approval under Hart-Scott-Rodino
and is expected to close in the third quarter of 2021.
“This is a great day in the young history of Kinder Morgan
Energy Transition Ventures (ETV),” said ETV President Jesse
Arenivas. “We have been focused on RNG due to its potential to grow
rapidly in the near term and deliver attractive returns, with
landfills providing a low cost, predictable and long-term
feedstock. The team at Kinetrex has developed an outstanding
business model and platform for future growth in a fragmented
market, and we are excited to welcome them to Kinder Morgan.”
“As we looked for the best partner to help grow our presence in
renewable natural gas, Kinder Morgan’s Energy Transition Ventures
emerged as the clear choice,” said Kinetrex President and Chief
Executive Officer Aaron Johnson. “KMI’s project management
expertise, extensive pipeline network and broad customer
relationships will undoubtedly help us realize the vision we had in
founding Kinetrex eight years ago: to provide holistic solutions
for customers seeking to meet emission reduction targets.”
Key members of Kinetrex’s management team will be joining KMI as
part of the acquisition to pursue new projects that expand their
successful RNG platform. After close, Johnson will continue with
KMI as president of Renewable Natural Gas and will report to
Arenivas. Since its inception in 2013, Kinetrex has been committed
to developing solutions that lower the cost of business while
maintaining a focus on environmental stewardship. This acquisition
will stay true to that focus.
KMI expects the investment to be accretive to its shareholders
as the three RNG facilities become operational over the next 18
months, with the purchase price and additional development capital
expenditures representing less than six times expected 2023
EBITDA.
J.P. Morgan Securities LLC acted as exclusive financial advisor
to Kinetrex Energy in connection with the transaction.
About Kinder Morgan,
Inc.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy
infrastructure companies in North America. Access to reliable,
affordable energy is a critical component for improving lives
around the world. We are committed to providing energy
transportation and storage services in a safe, efficient and
environmentally responsible manner for the benefit of people,
communities and businesses we serve. We own an interest in or
operate approximately 83,000 miles of pipelines, 144 terminals and
700 billion cubic feet of working natural gas storage capacity. Our
pipelines transport natural gas, refined petroleum products, crude
oil, condensate, CO2 and other products, and our terminals store
and handle various commodities including gasoline, diesel, jet
fuel, chemicals, ethanol, metals and petroleum coke. For more
information, please visit www.kindermorgan.com.
About Kinetrex Energy
Kinetrex Energy is a turn-key provider of environmentally
friendly renewable natural gas (RNG) and liquid natural gas (LNG)
solutions to customers in the transportation, industrial,
agricultural, utility and power industries. For more information,
please visit http://www.kinetrexenergy.com/.
About Parallel49 Equity
Based in Lake Forest, Illinois, Parallel49 Equity invests in
profitable, well-managed lower middle-market companies in North
America. Parallel49 Equity investment efforts are focused on the
industry sectors of specialty manufacturing and business services.
For more information, please visit www.p49equity.com.
Important Information Relating to
Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities and Exchange Act of 1934.
Generally the words “expects,” “believes,” anticipates,” “plans,”
“will,” “shall,” “estimates,” and similar expressions identify
forward-looking statements, which are not historical in nature.
Forward-looking statements in this news release include express or
implied statements concerning the proposed transaction, including
the parties’ ability to satisfy customary conditions to closing
(such as with respect to required regulatory approvals); the
prospects for RNG; and the anticipated timing and benefits of the
transaction and Kinetrex’s planned development projects to KMI’s
business and stockholders. Forward-looking statements are subject
to risks and uncertainties and are based on the beliefs and
assumptions of management, based on information currently available
to them. Although KMI believes that these forward-looking
statements are based on reasonable assumptions, it can give no
assurance as to when or if any such forward-looking statements will
materialize or their ultimate impact on KMI’s operations or
financial condition. Important factors that could cause actual
results to differ materially from those expressed in or implied by
these forward-looking statements include changes in the supply of
and demand for renewable natural gas; the timing, cost, and success
of expansion projects; commodity prices, particularly the prices
for Renewable Identification Numbers under the U.S. Environmental
Protection Agency’s Renewable Fuel Standard Program; counterparty
financial risk; the timing and success of business development
efforts; and the other risks and uncertainties described in KMI’s
reports filed with the Securities and Exchange Commission (SEC),
including its Annual Report on Form 10-K for the year-ended
December 31, 2020 (under the headings “Risk Factors” and
“Information Regarding Forward-Looking Statements” and elsewhere)
and its subsequent reports, which are available through the SEC’s
EDGAR system at www.sec.gov and on KMI’s website at
ir.kindermorgan.com. Forward-looking statements speak only as of
the date they were made, and except to the extent required by law,
KMI undertakes no obligation to update any forward-looking
statement because of new information, future events or other
factors. Because of these risks and uncertainties, readers should
not place undue reliance on these forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20210716005186/en/
Melissa Ruiz, Kinder Morgan Media Relations
newsroom@kindermorgan.com
Kinder Morgan Investor Relations (800) 348-7320
km_ir@kindermorgan.com
Sarah Holsapple Kinetrex Energy (317) 363-6800
sarah@holsapplecommunications.com
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