A Strategic Move in Texas Energy: The Matterhorn Express Pipeline Deal

The acquisition of interests in the Matterhorn Express Pipeline by I Squared Capital, MPLX LP, and Enbridge Inc. marks a significant milestone in the ongoing consolidation of North American energy infrastructure. This $5 billion deal, expected to close in the second quarter of 2025, underscores the strategic importance of natural gas transportation networks in the Permian Basin—a region pivotal to U.S. energy production. By securing stakes in this fully contracted 2.5 Bcf/d pipeline, the partners position themselves to capitalize on long-term demand for energy logistics while reducing revenue risk through contractual certainty.

The Pipeline’s Strategic Value

The Matterhorn Express Pipeline, operational since November 2024, spans approximately 510 miles from the Waha hub in the Permian Basin to Wharton, Texas, with laterals extending into the Midland Basin. Its 36-inch and 42-inch diameter mainlines, supported by compression facilities, are designed to transport natural gas to key markets near Houston, including the Katy area. The pipeline’s fully contracted capacity—2.5 Bcf/d—reflects strong demand from shippers, a critical feature that de-risks the investment.

The Permian Basin, one of the world’s most prolific shale plays, is undergoing a renaissance in natural gas production, driven by increased drilling and improved extraction technologies. Analysts estimate that Permian gas output could grow by over 10% annually through 2030, making infrastructure like Matterhorn essential to avoid bottlenecks.

Ownership Structure and Financial Dynamics

The deal’s ownership structure reveals a deliberate balance of expertise and capital:
- WhiteWater Development LLC, an Austin-based infrastructure operator, will hold 65% of the pipeline. This stake is jointly funded by I Squared Capital (managing $45 billion in infrastructure assets) and First Infrastructure Capital (FIC), a firm focused on critical infrastructure. WhiteWater retains operational control, leveraging its experience with Permian assets like the Whistler and Blackcomb Pipelines.
- MPLX LP and Enbridge Inc. each own 10%. Both are established midstream players: MPLX specializes in crude and refined products logistics, while Enbridge is a North American energy backbone, with growing renewable and hydrogen projects.

The transaction’s $5 billion valuation—encompassing debt and equity—suggests confidence in the pipeline’s cash flows. With all capacity under long-term agreements, investors can anticipate stable returns, even amid commodity price volatility.

Why This Deal Matters for Investors

The Matterhorn Express Pipeline acquisition exemplifies three key trends reshaping energy investing:
1. Permian Basin Dominance: The region’s gas production is expected to account for 25% of U.S. total output by 2030, necessitating robust takeaway capacity.
2. Infrastructure Privatization: Private equity firms like I Squared and FIC are increasingly filling the gap in capital-intensive projects, leveraging low interest rates and institutional demand for stable yields.
3. Collaborative Partnerships: The 65-10-10 ownership model allows smaller players like MPLX and Enbridge to gain exposure to critical assets without shouldering full operational risk—a template for future deals.

Risks and Considerations

While the fully contracted capacity mitigates revenue risk, investors must monitor macroeconomic factors:
- Interest Rate Environment: The $5 billion valuation includes debt, making the pipeline’s economics sensitive to borrowing costs.
- Regulatory Hurdles: Though the deal is on track for Q2 2025 closure, delays in permits or opposition from environmental groups could disrupt timelines.

Conclusion: A Prudent Bet on Energy Logistics

The Matterhorn Express Pipeline acquisition is a compelling investment thesis for two primary reasons:
1. Demand Certainty: With 2.5 Bcf/d fully contracted, the pipeline offers predictable cash flows, a rarity in volatile energy markets.
2. Strategic Alignment: The partners’ complementary expertise—WhiteWater’s operational prowess, I Squared’s capital strength, and MPLX/Enbridge’s midstream scale—positions the asset to thrive in the Permian’s growth trajectory.

Historically, pipelines with such robust contracts have delivered average annual returns of 8-10%, a figure supported by the partners’ track records. I Squared’s prior success with the Whistler Pipeline, for instance, generated a 14% IRR for investors. Meanwhile, Enbridge’s North American pipeline network has sustained a 6% dividend yield despite market turbulence.

As the U.S. energy sector transitions toward cleaner fuels, Matterhorn’s role in moving Permian gas—a relatively low-emission energy source—to urban markets aligns with ESG priorities. This deal isn’t just about infrastructure; it’s about securing the backbone of energy security for decades to come. For investors seeking stable, infrastructure-linked returns, Matterhorn represents a rare blend of growth and reliability in an uncertain landscape.

Data sources: Matterhorn Express Pipeline transaction details, IHS Markit energy forecasts, company investor presentations.