JUNO
BEACH, Fla., Dec. 28,
2023 /PRNewswire/ -- NextEra Energy Partners, LP
(NYSE: NEP) today announced it has closed on its previously
disclosed agreement with Kinder
Morgan, Inc. (NYSE: KMI) to sell its Texas natural gas pipeline portfolio for
$1.815 billion.
"The completion of this sale is an important step
in NextEra Energy Partners' transition plans," said
John Ketchum, chairman and chief
executive officer. "With the Texas
natural gas pipeline portfolio sale complete, the partnership has
sufficient proceeds available to address the equity buyouts of the
STX Midstream and NEP Renewables II convertible equity portfolio
financings."
The Texas natural gas pipeline
portfolio is primarily comprised of seven pipelines, which provide
natural gas to Mexico and power
producers and municipalities in South
Texas. The total 2023 calendar-year adjusted EBITDA for the
Texas natural gas pipeline
portfolio is expected to be approximately $180 million, with roughly 70% associated with
the transmission portion of the portfolio and the remaining 30%
associated with the midstream pipelines. The sale price represented
an approximate 10 times multiple on the estimated calendar-year
2023 adjusted EBITDA.
Upon receiving Hart-Scott-Rodino antitrust approval and meeting
all remaining closing conditions, NextEra Energy Partners received
net proceeds of $1.4 billion, after
extinguishing project-related debt and associated interest rate
swaps of approximately $430 million.
With the STX Midstream convertible equity portfolio financing
already paid off, NextEra Energy Partners expects to use the
remaining net proceeds to complete the NEP Renewables II buyouts on
their stated minimum buyout dates of June
2024 and June 2025,
respectively.
This news release refers to adjusted EBITDA
expectations. NextEra Energy Partners' adjusted EBITDA
expectations represent projected (a) revenue less (b) fuel expense,
less (c) project operating expenses, less (d) corporate G&A,
plus (e) other income less (f) other deductions including IDR fees.
Projected revenue as used in the calculations of projected EBITDA
represents the sum of projected (a) operating revenues plus (b) a
pre-tax allocation of production tax credits, plus (c) a pre-tax
allocation of investment tax credits plus (d) earnings impact from
convertible investment tax credits and plus (e) the reimbursement
for lost revenue received pursuant to a contract with NextEra
Energy Resources.
NextEra Energy Partners, LP
NextEra Energy Partners, LP (NYSE: NEP) is a growth-oriented
limited partnership formed by NextEra Energy, Inc. (NYSE:
NEE). NextEra Energy Partners acquires, manages and
owns contracted clean energy projects with stable, long-term
cash flows. Headquartered in Juno Beach, Florida, NextEra
Energy Partners owns interests in geographically diverse wind,
solar and energy storage projects in the U.S. as well as
natural gas infrastructure assets in Pennsylvania. For more information
about NextEra Energy Partners, please visit:
www.NextEraEnergyPartners.com.
Cautionary Statements and Risk Factors That
May Affect Future Results
This news release contains "forward-looking statements" within
the meaning of the federal securities laws. Forward-looking
statements are not statements of historical facts, but instead
represent the current expectations of NextEra Energy Partners, LP
(together with its subsidiaries, NEP) regarding future operating
results and other future events, many of which, by their nature,
are inherently uncertain and outside of NEP's control.
Forward-looking statements in this news release include, among
others, statements concerning NEP's transition plans, adjusted
EBITDA, cash available for distributions (CAFD), and unit
distribution expectations, as well as statements concerning NEP's
future operating performance, equity issuance expectations,
financing needs, expected proceeds from asset sales, and results of
dispositions. In some cases, you can identify the forward-looking
statements by words or phrases such as "will," "may result,"
"expect," "anticipate," "believe," "intend," "plan," "seek," "aim,"
"potential," "projection," "forecast," "predict," "goals,"
"target," "outlook," "should," "would" or similar words or
expressions. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future
performance. The future results of NEP and its business and
financial condition are subject to risks and uncertainties that
could cause NEP's actual results to differ materially from those
expressed or implied in the forward-looking statements. These risks
and uncertainties could require NEP to limit or eliminate certain
operations. These risks and uncertainties include, but are not
limited to, the following: NEP's ability to make cash distributions
to its unitholders is affected by the performance of its renewable
energy projects which could be impacted by wind and solar
conditions and in certain circumstances by market prices; operation
and maintenance of renewable energy projects and pipelines involve
significant risks that could result in unplanned power outages,
reduced output or capacity, personal injury or loss of life; NEP's
business, financial condition, results of operations and prospects
can be materially adversely affected by weather conditions,
including, but not limited to, the impact of severe weather; NEP
depends on certain of the renewable energy projects and pipelines
in its portfolio for a substantial portion of its anticipated cash
flows; NEP may pursue the repowering of renewable energy projects
and could expose NEP to project development risks; geopolitical
factors, terrorist acts, cyberattacks or other similar events could
impact NEP's projects, pipelines or surrounding areas and adversely
affect its business; the ability of NEP to obtain insurance and the
terms of any available insurance coverage could be materially
adversely affected by international, national, state or local
events and company-specific events, as well as the financial
condition of insurers. NEP's insurance coverage does not provide
protection against all significant losses; NEP relies on
interconnection, transmission and other pipeline facilities of
third parties to deliver energy from its renewable energy projects
and to transport natural gas to and from its pipelines. If these
facilities become unavailable, NEP's projects and pipelines may not
be able to operate or deliver energy or may become partially or
fully unavailable to transport natural gas; NEP's business is
subject to liabilities and operating restrictions arising from
environmental, health and safety laws and regulations, compliance
with which may require significant capital expenditures, increase
NEP's cost of operations and affect or limit its business plans;
NEP's renewable energy projects or pipelines may be adversely
affected by legislative changes or a failure to comply with
applicable energy and pipeline regulations; Petroleos Mexicanos
(Pemex) may claim certain immunities under the Foreign Sovereign
Immunities Act and Mexican law, and the subsidiaries' of NEP that
directly own the natural gas pipeline assets located in
Texas ability to sue or recover
from Pemex for breach of contract may be limited and may be
exacerbated if there is a deterioration in the economic
relationship between the U.S. and Mexico; NEP does not own all of the land on
which the projects in its portfolio are located and its use and
enjoyment of the property may be adversely affected to the extent
that there are any lienholders or land rights holders that have
rights that are superior to NEP's rights or the U.S. Bureau of Land
Management suspends its federal rights-of-way grants; NEP is
subject to risks associated with litigation or administrative
proceedings that could materially impact its operations, including,
but not limited to, proceedings related to projects it acquires in
the future; NEP's operations require NEP to comply with
anti-corruption laws and regulations of the U.S. government and
Mexico; NEP is subject to risks
associated with its ownership interests in projects that are under
construction, which could result in its inability to complete
construction projects on time or at all, and make projects too
expensive to complete or cause the return on an investment to be
less than expected; NEP relies on a limited number of customers and
is exposed to the risk that they may be unwilling or unable to
fulfill their contractual obligations to NEP or that they otherwise
terminate their agreements with NEP; NEP may not be able to extend,
renew or replace expiring or terminated power purchase agreements
(PPA), natural gas transportation agreements or other customer
contracts at favorable rates or on a long-term basis; if the energy
production by or availability of NEP's renewable energy projects is
less than expected, they may not be able to satisfy minimum
production or availability obligations under their PPAs; NEP's
growth strategy depends on locating and acquiring interests in
additional projects consistent with its business strategy at
favorable prices; reductions in demand for natural gas in the U.S.
or Mexico and low market prices of
natural gas could materially adversely affect NEP's pipeline
operations and cash flows; government laws, regulations and
policies providing incentives and subsidies for clean energy could
be changed, reduced or eliminated at any time and such changes may
negatively impact NEP's growth strategy; NEP's growth strategy
depends on the acquisition of projects developed by NextEra Energy,
Inc. (NEE) and third parties, which face risks related to project
siting, financing, construction, permitting, the environment,
governmental approvals and the negotiation of project development
agreements; acquisitions of existing clean energy projects involve
numerous risks; NEP may continue to acquire other sources of clean
energy and may expand to include other types of assets. Any further
acquisition of non-renewable energy projects may present unforeseen
challenges and result in a competitive disadvantage relative to
NEP's more-established competitors; NEP faces substantial
competition primarily from regulated utility holding companies,
developers, independent power producers, pension funds and private
equity funds for opportunities in North
America; the natural gas pipeline industry is highly
competitive, and increased competitive pressure could adversely
affect NEP's business; NEP may not be able to access sources of
capital on commercially reasonable terms, which would have a
material adverse effect on its ability to consummate future
acquisitions and pursue other growth opportunities; restrictions in
NEP and its subsidiaries' financing agreements could adversely
affect NEP's business, financial condition, results of operations
and ability to make cash distributions to its unitholders; NEP's
cash distributions to its unitholders may be reduced as a result of
restrictions on NEP's subsidiaries' cash distributions to NEP under
the terms of their indebtedness or other financing agreements;
NEP's subsidiaries' substantial amount of indebtedness may
adversely affect NEP's ability to operate its business, and its
failure to comply with the terms of its subsidiaries' indebtedness
could have a material adverse effect on NEP's financial condition;
NEP is exposed to risks inherent in its use of interest rate swaps;
widespread public health crises and epidemics or pandemics may have
material adverse impacts on NEP's business, financial condition,
liquidity, results of operations and ability to make cash
distributions to its unitholders; NEE has influence over NEP; under
the cash sweep and credit support agreement, NEP receives credit
support from NEE and its affiliates. NEP's subsidiaries may default
under contracts or become subject to cash sweeps if credit support
is terminated, if NEE or its affiliates fail to honor their
obligations under credit support arrangements, or if NEE or another
credit support provider ceases to satisfy creditworthiness
requirements, and NEP will be required in certain circumstances to
reimburse NEE for draws that are made on credit support; NextEra
Energy Resources, LLC (NEER) and certain of its affiliates are
permitted to borrow funds received by NextEra Energy Operating
Partners, LP (NEP OpCo) or its subsidiaries and is obligated to
return these funds only as needed to cover project costs and
distributions or as demanded by NEP OpCo. NEP's financial condition
and ability to make distributions to its unitholders, as well as
its ability to grow distributions in the future, is highly
dependent on NEER's performance of its obligations to return all or
a portion of these funds; NEER's right of first refusal may
adversely affect NEP's ability to consummate future sales or to
obtain favorable sale terms; NextEra Energy Partners GP, Inc. (NEP
GP) and its affiliates may have conflicts of interest with NEP and
have limited duties to NEP and its unitholders; NEP GP and its
affiliates and the directors and officers of NEP are not restricted
in their ability to compete with NEP, whose business is subject to
certain restrictions; NEP may only terminate the Management
Services Agreement among, NEP, NextEra Energy Management Partners,
LP (NEE Management), NEP OpCo and NextEra Energy Operating Partners
GP, LLC under certain limited circumstances; if the agreements with
NEE Management or NEER are terminated, NEP may be unable to
contract with a substitute service provider on similar terms; NEP's
arrangements with NEE limit NEE's potential liability, and NEP has
agreed to indemnify NEE against claims that it may face in
connection with such arrangements, which may lead NEE to assume
greater risks when making decisions relating to NEP than it
otherwise would if acting solely for its own account; NEP's ability
to make distributions to its unitholders depends on the ability of
NEP OpCo to make cash distributions to its limited partners; if NEP
incurs material tax liabilities, NEP's distributions to its
unitholders may be reduced, without any corresponding reduction in
the amount of the IDR fee; holders of NEP's units may be subject to
voting restrictions; NEP's partnership agreement replaces the
fiduciary duties that NEP GP and NEP's directors and officers might
have to holders of its common units with contractual standards
governing their duties and the New York Stock Exchange does not
require a publicly traded limited partnership like NEP to comply
with certain of its corporate governance requirements; NEP's
partnership agreement restricts the remedies available to holders
of NEP's common units for actions taken by NEP's directors or NEP
GP that might otherwise constitute breaches of fiduciary duties;
certain of NEP's actions require the consent of NEP GP; holders of
NEP's common units currently cannot remove NEP GP without NEE's
consent and provisions in NEP's partnership agreement may
discourage or delay an acquisition of NEP that NEP unitholders may
consider favorable; NEE's interest in NEP GP and the control of NEP
GP may be transferred to a third party without unitholder consent;
reimbursements and fees owed to NEP GP and its affiliates for
services provided to NEP or on NEP's behalf will reduce cash
distributions from NEP OpCo and from NEP to NEP's unitholders, and
there are no limits on the amount that NEP OpCo may be required to
pay; increases in interest rates could adversely impact the price
of NEP's common units, NEP's ability to issue equity or incur debt
for acquisitions or other purposes and NEP's ability to make cash
distributions to its unitholders; the liability of holders of NEP's
units, which represent limited partnership interests in NEP, may
not be limited if a court finds that unitholder action constitutes
control of NEP's business; unitholders may have liability to repay
distributions that were wrongfully distributed to them; the
issuance of common units, or other limited partnership interests,
or securities convertible into, or settleable with, common units,
and any subsequent conversion or settlement, will dilute common
unitholders' ownership in NEP, may decrease the amount of cash
available for distribution for each common unit, will impact the
relative voting strength of outstanding NEP common units and
issuance of such securities, or the possibility of issuance of such
securities, as well as the resale, or possible resale following
conversion or settlement, may result in a decline in the market
price for NEP's common units; NEP's future tax liability may be
greater than expected if NEP does not generate net operating losses
(NOLs) sufficient to offset taxable income or if tax authorities
challenge certain of NEP's tax positions; NEP's ability to use NOLs
to offset future income may be limited; NEP will not have complete
control over NEP's tax decisions; and distributions to unitholders
may be taxable as dividends. NEP discusses these and other risks
and uncertainties in its annual report on Form 10-K for the year
ended December 31, 2022 and other
Securities and Exchange Commission (SEC) filings, and this news
release should be read in conjunction with such SEC filings made
through the date of this news release. The forward-looking
statements made in this news release are made only as of the date
of this news release and NEP undertakes no obligation to update any
forward-looking statements.
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SOURCE NextEra Energy Partners, LP