Keyera Buys Full KAPS Pipeline Stake for $1.215B

Keyera Corp. has finalized its acquisition of the remaining 50% stake in the KAPS Pipeline system from Stonepeak, a significant move that consolidates full ownership of this critical natural gas liquids (NGL) infrastructure. The transaction, valued at $1.215 billion, positions Keyera to fully leverage the pipeline's strategic importance in connecting burgeoning NGL production from Alberta's Montney and Duvernay formations to lucrative downstream markets.

This strategic consolidation is expected to significantly enhance Keyera's fee-based adjusted EBITDA per share growth trajectory, with the company now projecting a compound annual growth rate (CAGR) of 16% to 18% between 2025 and 2027, an increase from its prior 15% to 17% target. The KAPS pipeline, a vital artery for condensate and NGLs, has already secured over 120,000 barrels per day in new commitments since 2025 from high-caliber counterparties, underpinning stable, long-term contracted cash flows.

The acquisition is projected to be accretive to Keyera's distributable cash flow per share in the low single digits over the coming years. Furthermore, with the ongoing construction of KAPS Zone 4 on schedule for a mid-2027 in-service date, the pipeline is anticipated to generate substantial free cash flow well into the next decade. This outlook is supported by contracted volume expansion, minimal maintenance capital expenditure needs, and tax efficiencies realized through the transaction. The deal implies an acquisition multiple of approximately 11 times 2029 EBITDA, based on current contracted volumes, without factoring in potential upside from future contracting opportunities.

Dean Setoguchi, President and Chief Executive Officer of Keyera, emphasized the strategic alignment of the acquisition with the company's objective to fortify its integrated value chain and deliver enhanced services to customers. Full ownership of KAPS is anticipated to provide greater operational flexibility and efficiency for producers, while simultaneously amplifying Keyera's exposure to durable, long-term growth in contracted cash flows. The KAPS pipeline's existing contracts boast an average remaining term of approximately 12 years, with 75% of contributions structured as take-or-pay, reinforcing the quality and predictability of Keyera's revenue streams.

Financially, Keyera has structured the acquisition to maintain its robust balance sheet and investment-grade credit profile. The company plans to fund the transaction through a combination of existing credit facilities and a $525 million common equity offering. Net debt to adjusted EBITDA is expected to remain within Keyera's target range of 2.5x to 3.0x by 2028. An additional $100 million in growth capital is anticipated for 2026 to cover Keyera's increased share of the remaining capital required for KAPS Zone 4 completion.

This transaction underscores the strategic importance of midstream infrastructure in the rapidly developing Montney and Duvernay plays, areas experiencing significant growth in NGL production. By consolidating ownership, Keyera is well-positioned to capitalize on this expansion, offering integrated solutions that enhance value for producers and secure long-term, fee-based revenue streams. The deal also highlights the ongoing consolidation trend within the North American energy infrastructure sector as companies seek to optimize asset portfolios and enhance operational efficiencies.