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ESENTIA Energy Development Expands Its Pipeline Network

ESENTIA Energy Development, a key player in Mexico's energy sector, has recently announced a significant acquisition that promises to reshape its operational dynamics in natural gas transportation. The company has entered into an agreement to purchase 100% of the equity interests of Energía Occidente de México (EOM) for a total of $400 million. This strategic move is poised to enhance ESENTIA's existing infrastructure by integrating the approximately 313-kilometer Guadalajara-Manzanillo natural gas pipeline system.

Details of the Transaction

The Guadalajara-Manzanillo pipeline system serves as a crucial link between the Guadalajara region in Jalisco and the strategic Pacific port city of Manzanillo in Colima. With this acquisition, ESENTIA aims to extend its integrated pipeline network further into the Pacific, situating itself uniquely as the only private firm with a direct connection from the Permian Basin in Texas to Mexico's Pacific coast.

By combining the strengths of the Guadalajara-Manzanillo System with its current infrastructure, ESENTIA anticipates substantial operational synergies and cost efficiencies over time. Furthermore, this acquisition will enhance commercial flexibility, allowing the company to better serve a broader range of customers, including those in power generation and industrial sectors.

Strategic Significance

Daniel Bustos, CEO of ESENTIA, emphasized that this acquisition aligns with the company’s main goal of developing a cohesive cross-border transportation system. He noted, "The Acquisition is consistent with ESENTIA's strategy to build a cohesive cross-border transportation system through disciplined M&A that capitalizes on our existing infrastructure."
This move is expected to solidify ESENTIA’s position among Mexico’s leading natural gas transportation entities and provide significant growth opportunities as demand continues to rise.

Financing the Acquisition

To finance this ambitious purchase, ESENTIA plans to use a combination of available liquidity and existing credit facilities. This strategy will enable the company to maintain its current level of gross indebtedness, despite the financial outlay for the acquisition. The completion of this acquisition is pending customary closing conditions and necessary regulatory approvals.

About the Guadalajara-Manzanillo System

The Guadalajara-Manzanillo natural gas transportation system comprises two main segments:

• - Segment 1: A 5.5-kilometer pipeline with a 24-inch diameter, capable of transporting around 500 million cubic feet per day (MMcf/d). This segment links the LNG Manzanillo regasification terminal directly to the Comisión Federal de Electricidad’s CT Manzanillo power generation facility.
• - Segment 2: A much larger segment extending approximately 307.3 kilometers with a 30-inch diameter, designed to carry 360 MMcf/d. This segment connects the Manzanillo area to Guadalajara and interlinks with ESENTIA's existing Villa de Reyes-Aguascalientes-Guadalajara system.

ESENTIA Energy Systems: A Commitment to Growth

ESENTIA Energy Systems has been a strong advocate for growth in Mexico's energy landscape, emphasizing the importance of accessibility and sustainability in energy delivery. With over two decades of experience, the company has created a robust infrastructure supporting the supply of reliable natural gas across major industrial regions of Mexico. The incorporation of the Guadalajara-Manzanillo system is poised to enhance this goal even further, fostering a stable energy future for the regions it serves.

As ESENTIA moves forward with this transformative acquisition, the industry will be watching closely to see how it impacts their operations and the broader energy market in Mexico. Stay tuned for more updates as this story unfolds.