The transaction is due to be completed in the first quarter of 2025 (Q1 2025). Credit: JHVEPhoto/Shutterstock.

US-based pipeline operator Kinder Morgan has entered an agreement with Outrigger Energy II to acquire a natural gas gathering and processing system in the Bakken formation in North Dakota for $640m.

Kinder Morgan aims to reduce future capital expenditure to accommodate the growth of its existing Bakken customers through this strategic purchase.

The acquisition, made by Kinder Morgan’s subsidiary Hiland Partners Holdings, includes a 270mcf/d processing facility and a 104-mile, high-pressure rich gas gathering header pipeline in the Williston Basin area.

The pipeline, with 350mcf/d of capacity, supplies gas from the Williston Basin area to high-demand markets.

The gathering and processing system is supported by long-term contracts with commitments from key basin customers.

Kinder Morgan Natural Gas Midstream president Tom Dender said: “We are pleased to be integrating this complementary system with our existing Hiland gas assets to aggregate additional supplies from the Bakken.

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“This strategic acquisition allows us to efficiently expand our footprint and provide incremental transportation and processing services to meet the growing needs of our customers.”

The acquisition is expected to be immediately accretive to Kinder Morgan shareholders, with a projected 2025 adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) multiple of around eight times.

The adjusted EBITDA forecast excludes an estimated $20m in deferred revenue recognition cash payments for 2025.

Initially, Kinder Morgan plans to finance the acquisition using short-term borrowings and available cash.

The transaction is pending Hart-Scott-Rodino clearance and is due to be completed in Q1 2025.

This move follows the $100m acquisition of assets by Kinder Morgan in West Texas in May 2024 and the confirmation of the MSX Project by Tennessee Gas Pipeline, a Kinder Morgan subsidiary, in December 2024.