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Summit Utilities Inc. of Centennial, Colorado, said Thursday that it will buy CenterPoint Energy’s Arkansas and Oklahoma natural gas distribution assets in a $2.15 billion cash deal.
CenterPoint’s Arkansas and Oklahoma systems serve 525,000 customers and include 17,000 miles of gas main pipeline across Arkansas, Oklahoma and Texarkana, Texas.
In a news release, Summit said expanding service territories in Arkansas and Oklahoma will provide more scale and capacity “to further its mission of providing exceptional service to natural gas customers in the region.”
Summit entered Arkansas in 2017 when it completed a deal to buy Arkansas Oklahoma Gas Corp. of Fort Smith, the utility owned for more than seven decades by the Witt Stephens family.
Privately held Summit also owns natural gas systems in Colorado, Maine and Missouri, where it has 100,000 customers and more than 5,400 miles of pipeline.
“CenterPoint has built a strong reputation for quality customer service and we are eager to carry on that tradition, and continue to help families, businesses and industries throughout Arkansas and Oklahoma meet their energy needs through the delivery of safe, reliable and affordable natural gas services,” Summit President and CEO Kurt Adams said.
The deal is expected to close by the end of the year, subject to customary closing conditions, including approval by the Arkansas Public Service Commission.
Publicly traded CenterPoint said the deal represents “a landmark valuation” at 38 times 2020 earnings, demonstrating “significantly higher market value for natural gas infrastructure assets, including CenterPoint’s remaining gas businesses.”
“We believe the price paid for these assets demonstrates that the market is significantly undervaluing the remainder of our natural gas businesses,” CenterPoint President and CEO Dave Lesar said in a news release.
Lesar said the deal will allow the Houston company to eliminate $425 million in winter storm-related incremental natural gas costs in Arkansas and Oklahoma.
CenterPoint has about 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas.