NextEra Energy Partners LP (NYSE: NEP) on Oct. 5 announced that it has completed the previously-announced acquisition of NET Midstream, a privately-held developer, owner and operator of a portfolio of seven long-term contracted natural gas pipeline assets located in Texas.
NextEra Energy Partners also announced the completion of the acquisition of the 149-MW Jericho Wind Energy Center in Ontario, Canada, from a subsidiary of its sponsor, NextEra Energy Resources LLC. In addition, the partnership has closed $600 million of term loans, which completes its financing for the NET Midstream and Jericho acquisitions.
“I’m very pleased that we have completed the necessary financing and closed these two acquisitions, which support our growth strategy,” said Jim Robo, chairman and chief executive officer. “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 Jericho acquisition further expands NextEra Energy Partners’ renewables portfolio, demonstrating the strength of the pipeline for dropdowns from its sponsor. We expect both of these acquisitions to provide attractive yields to our investors, and we continue to view NextEra Energy Partners as the premier yieldco in the space.”
The seven natural gas pipelines in the portfolio serve power producers and municipalities in South Texas, processing plants and producers in the Eagle Ford Shale, and residential, commercial and industrial customers in the Houston area.
The NET Mexico Pipeline, the largest pipeline in the portfolio, provides a critical source of natural gas transportation for low-cost, U.S.-sourced shale gas to Mexico under a 20-year ship-or-pay contract with a wholly-owned subsidiary of Pemex Gas y Petroquimica Basica, a division of PEMEX, the Mexican state-owned oil and gas company. The NET Mexico Pipeline is 10% owned by a PEMEX subsidiary.
The combined acquisition portfolio includes 3.0 billion cubic feet (Bcf) per day of ship-or-pay contracts, with on average investment-grade counterparty credit and long-term contracted assets with a 16-year average contract life. The three largest pipelines in the portfolio have planned growth and expansion projects that, if completed, are expected to provide approximately 1.0 Bcf per day of additional contracted volumes.
NextEra Energy Partners acquired NET Midstream for a total transaction value of approximately $2.1 billion, including $934 million in cash consideration and the assumption of approximately $654 million in existing debt, and excluding post-closing working capital and other adjustments. The $300 million for the expansion projects is expected to be financed almost entirely with incremental future debt.
For the NET Midstream acquisition, Wells Fargo Securities served as financial advisor to NextEra Energy Partners and Locke Lord served as legal counsel to the partnership.
The Jericho Wind Energy Center buy was for a total purchase price of approximately $210 million in cash consideration, plus approximately $19 million in working capital (subject to post-closing adjustments), with the assumption of approximately $294 million in existing debt. The addition of the Jericho Wind Energy Center in Ontario, Canada, increases NextEra Energy Partners’ renewables portfolio to more than 2,072 MW.
NextEra Energy Partners LP is a growth-oriented limited partnership formed by NextEra Energy (NYSE: NEE) to acquire, manage and own contracted clean energy projects with stable, long-term cash flows. Headquartered in Juno Beach, Fla., NextEra Energy Partners owns interests in wind and solar projects in North America, as well as natural gas infrastructure assets in Texas.