Kinetik Holdings Inc., in a series of transactions, has added to its Delaware basin natural gas processing capacity, signed a 15-year gathering and processing services agreement, and agreed to divest its 16% equity interest in Gulf Coast Express pipeline (GCX).
The company agreed to acquire Durango Permian LLC for an aggregate $765 million of cash and equity with up to $75 million of contingent consideration.
Durango’s assets, in Eddy, Lea, and Chaves Counties, New Mexico, include about 2,400 miles of gas gathering pipelines and about 220 MMcfd of processing capacity. Durango is currently constructing Kings Landing, a new 200 MMcfd greenfield processing complex in Eddy County, which is expected to be completed in April 2025, increasing Durango’s processing capacity to 420 MMcfd. Kinetik estimates an additional $78 million of net capital expenditures required to complete Kings Landing construction. The deal is expected to close in June 2024.
In a separate deal, Kinetik executed a 15-year low-pressure and high-pressure gas gathering and processing agreement with an existing, unnamed customer.
Kinetik will construct low-pressure and high-pressure gathering infrastructure. The contract will begin at yearend, starting with gathering services and extend to processing services starting in second-quarter 2025.
As one funding source for the Durango acquisition and capital for the new gathering and processing agreement, Kinetik agreed to sell its 16% equity interest in Kinder Morgan Inc.-operated GCX pipeline to an affiliate of ArcLight Capital Partners LLC for $540 million.
