NextEra Energy Partners (NYSE: NEP) reported Q2 EPS of $0.16, $0.06 worse than the analyst estimate of $0.22. Revenue for the quarter came in at $107 million versus the consensus estimate of $112.21 million.

NextEra Energy Partners has entered into an agreement to acquire NET Midstream, a privately held developer, owner and operator of a portfolio of seven long-term contracted natural gas pipeline assets located in Texas. NET Midstream's pipeline assets are all strategically located, serving power producers and municipalities in South Texas, processing plants and producers in the Eagle Ford Shale, and residential, commercial and industrial customers in the Houston area, and provide a critical source of natural gas transportation for low-cost, U.S.-sourced shale gas to Mexico.

The combined acquisition portfolio includes 3.0 billion cubic feet (Bcf) per day of ship-or-pay contracts, with on average investment-grade counterparty credit. The three largest pipelines in the portfolio have planned growth and expansion projects that if completed are expected to provide an additional 1.0 Bcf per day of contracted volumes. The portfolio consists of:

• The NET Mexico Pipeline, the largest pipeline in the portfolio, which is a 120-mile, 42-inch diameter pipeline that delivers low-cost natural gas from the Eagle Ford Shale to the Mexico border under a 20-year ship-or-pay contract with a BBB+-rated, wholly owned subsidiary of Pemex Gas y Petroquimica Basica, a division of PEMEX, the Mexican state-owned oil and gas company. The NET Mexico Pipeline, which is 10 percent owned by PEMEX's subsidiary and interconnects with PEMEX's own natural gas pipeline system at the U.S. and Mexico border, is the largest-diameter and lowest-tariff transmission pipeline delivering gas from the Eagle Ford Shale to the U.S. border with Mexico. The pipeline is strategically positioned to provide low-cost, U.S.-sourced shale gas to meet the increasing demand of Mexico load centers and growing natural gas markets.
• The Eagle Ford Pipeline, the portfolio's second largest pipeline, which is an approximately 158-mile, large-diameter natural gas pipeline located in the Eagle Ford Shale, anchored by a long-term, ship-or-pay commitment from an investment-grade producer. The system's connection to the Agua Dulce Hub, with access to multiple pipeline interconnects, as well as Mexican markets, uniquely positions the system to attract additional Eagle Ford Shale volumes.
• The Monument Pipeline, the third largest pipeline in the portfolio, which is an approximately 156-mile, 16-inch pipeline that transports gas from the Katy Hub to the growing city gates of Houston, as well as to the Houston Ship Channel and Galveston County.
• Four smaller Texas pipelines that serve a variety of power plants and residential loads.

The transaction is valued at $2.1 billion and includes initial consideration of $1.8 billion, which NextEra Energy Partners expects to be financed, in part, by approximately $600 million of non-amortizing debt secured by the acquired assets. The transaction also contemplates a future expansion investment of approximately $300 million in 2016, which NextEra Energy Partners expects to finance primarily with debt. Overall, permanent financing is expected to consist of approximately $1.2 billion of equity and $900 million of debt. The transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Act. NextEra Energy Partners expects to close the transaction within 75 days.

NextEra Energy Partners expects the acquisition to contribute 2016 adjusted EBITDA and CAFD of approximately $145 million to $155 million and $110 million to $120 million, respectively. If the expansion projects are completed as planned, the acquisition is expected to contribute 2018 adjusted EBITDA and CAFD of approximately $190 million to $210 million and $135 million to $155 million, respectively. The transaction is expected to be immediately accretive to NextEra Energy Partners' distribution per unit.

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