Keyera Corp. announced that it has closed on the purchase of the remaining 50% non-operating stake in the KAPS Pipeline from Stonepeak for $1.215 billion. The transaction was completed on the same day the company disclosed the deal, resulting in Keyera holding 100% ownership of the pipeline system.
KAPS is a natural gas liquids pipeline network that moves condensate and NGL production from the Montney and Duvernay resource plays to downstream markets. Since 2025, Keyera has secured more than 120,000 barrels per day of new commitments across KAPS Zones 1 to 4. Construction of KAPS Zone 4 remains on schedule and on budget, and Keyera expects Zone 4 to enter service in mid-2027.
Commenting on the acquisition, Dean Setoguchi, President and Chief Executive Officer of Keyera, said: "This transaction is directly aligned with our strategy to enhance and extend our integrated value chain and deliver competitive services that help our customers maximize value for their products."
Keyera outlined near- and medium-term financial expectations tied to the deal. Management said the acquisition is expected to be low-single digit accretive to distributable cash flow per share over the next several years. Beyond the completion and initial ramp-up of Zone 4 through 2030, the company anticipates KAPS will generate free cash flow, supported by contracted volume growth and minimal maintenance capital requirements.
Including the remaining capital required to complete Zone 4, Keyera said the transaction implies an acquisition multiple of approximately 11 times 2029 EBITDA based on currently contracted volumes.
Keyera also revised certain growth targets tied to fee-based adjusted EBITDA per share. The company said the transaction increases its targeted fee-based adjusted EBITDA per share compound annual growth rate from 15% to 17% to 16% to 18% between 2025 and 2027. The company reiterated that its targeted 7% to 8% fee-based adjusted EBITDA per share compound annual growth rate from 2027 to 2029 remains unchanged.
KAPS is supported by long-term customer agreements. Keyera reported that the pipeline is underpinned by contracts with an average remaining term of approximately 12 years and that take-or-pay contributions account for 75% of contracted volume.
On leverage and capital expectations, Keyera said it expects net debt to adjusted EBITDA to be within its stated target range of 2.5x to 3.0x in 2028. The company also flagged that it expects to require approximately $100 million of additional 2026 growth capital related to funding its increased share of the remaining capital to complete Zone 4.
To support funding needs associated with the transaction and its share of remaining capital, Keyera entered into an agreement to issue $525 million of common equity through a bought deal offering, before the exercise of any over-allotment option. The purchase price of the KAPS interest was funded through borrowings under existing credit facilities of Keyera Partnership.
Advisors on the transaction were disclosed. RBC Capital Markets served as financial advisor to Keyera, with Norton Rose Fulbright Canada LLP and McCarthy Tétrault LLP acting as legal advisors to Keyera. Scotia Capital Inc. acted as financial advisor to Stonepeak. Sidley Austin LLP, Stikeman Elliott LLP, and Goodmans LLP served as legal advisors to Stonepeak.
Takeaway - Keyera now owns the entire KAPS Pipeline network, expects modest near-term accretion to distributable cash flow per share, and projects that KAPS will generate free cash flow following Zone 4 completion and ramp through 2030. The company has outlined funding steps and advisor teams while maintaining its targeted leverage range for 2028.