en.Wedoany.com Reported - Keyera Corp. has completed the acquisition of the remaining 50% stake in the KAPS Pipeline, a key natural gas liquids transportation system in Western Canada, for C$1.215 billion, thereby gaining full ownership of the pipeline. The transaction, purchased from infrastructure investment firm Stonepeak, was closed immediately after signing, granting Keyera complete ownership and operational control of the pipeline network.
The KAPS pipeline system connects the rapidly expanding Montney and Duvernay shale plays, transporting condensate and natural gas liquids to downstream markets. As producers in these shale plays continue to increase output of liquids-rich natural gas, the pipeline system's importance is growing. Keyera Corp. noted that since 2025, KAPS Zones 1 to 4 have secured over 120,000 barrels per day in additional commitments, supporting growth in long-term contract revenue.
At the time of this acquisition, construction of KAPS Zone 4 is progressing on schedule and within budget, with the expansion project expected to begin operations in mid-2027. The project aims to meet the growing capacity demands of the most active unconventional resource basins in Western Canada. Keyera Corp. expects the deal to increase distributable cash flow per share in the coming years, and after Zone 4 is completed, the pipeline should generate substantial free cash flow by the late 2020s. The company estimates that, based on current contracted volumes, the acquisition multiple is approximately 11 times the projected EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for 2029.
Keyera Corp. has also raised its growth outlook, increasing the target compound annual growth rate for adjusted EBITDA per share on a fee-based basis from 15%-17% to 16%-18% for 2025-2027. The long-term growth target of 7%-8% annually from 2027 to 2029 remains unchanged. The main appeal of this asset lies in its stable contracted revenue structure, with approximately 75% of KAPS' cash flow supported by take-or-pay agreements, and the average remaining term of customer contracts is about 12 years.
To fund this acquisition, Keyera Corp. announced a C$525 million underwritten equity offering, with interim funding provided through existing credit facilities. The company stated that it expects the net debt to adjusted EBITDA ratio to remain within its target leverage range of 2.5 to 3.0 times by 2028, thereby maintaining its investment-grade balance sheet. This transaction highlights continued investment in Canadian energy infrastructure, as producers expand liquids production in the Montney and Duvernay formations, two of North America's most prolific unconventional oil and gas regions. Full ownership of KAPS also strengthens Keyera Corp.'s integrated midstream network, which includes natural gas processing, natural gas liquids transportation, storage, and marketing assets in Western Canada.
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