DT Midstream (DTM) announced that it has reached an agreement to acquire a portfolio of three FERC-regulated natural gas transmission pipelines from Oneok (OKE) for $1.2B. The pipelines have a total capacity of more than 3.7 Bcf/d with approximately 1,300 miles across seven states in the Midwest market region. The acquisition price represents an approximately 10.5x 2025 EBITDA multiple. Under the terms of the agreement, DT Midstream will acquire 100% operating ownership in Guardian Pipeline, Midwestern Gas Transmission and Viking Gas Transmission. Guardian Pipeline is an approximately 260-mile interstate pipeline which is interconnected to DT Midstream’s Vector Pipeline, the Chicago Hub and serves Wisconsin demand centers. Midwestern Gas Transmission is an approximately 400-mile bi-directional interstate pipeline which connects Appalachia supply to the Midwest market region between Tennessee and the Chicago Hub. The pipeline has an interconnection with Guardian Pipeline. Viking Gas Transmission is an approximately 675-mile interstate pipeline which connects key utility customers in Minnesota, Wisconsin and North Dakota to Canadian supply at Emerson, Manitoba. The acquisition directly aligns with DT Midstream’s strategy of owning natural gas assets connecting premier supply basins with key demand centers and market regions, and with revenues supported by take-or-pay contracts with creditworthy and diverse customers. The transaction is expected to increase DT Midstream’s pipeline segment to approximately 70% of adjusted EBITDA in 2025 and will increase the backlog of organic growth projects. Overall, the acquired portfolio has an approximately 90% demand-pull customer base with approximately 85% of revenues from investment-grade customers. The transaction has been approved by DT Midstream’s board of directors and is expected to close in late 2024 or early 2025, subject to regulatory approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, and other customary closing conditions.
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