Vistra Energy to buy Texan 1GW natural gas-fired plant

Vistra Energy, the parent company for TXU Energy and Luminant, has announced it has entered into a definitive agreement to acquire a 1,054 MW combined cycle, combustion turbine power plant located in Odessa, Texas (the "Odessa plant") from a subsidiary of Koch Ag & Energy Solutions, LLC. 

Transaction Highlights:

• US$350 million purchase price (~US$332 per installed kilowatt) plus a spark spread-based earn-out payable only if market conditions meaningfully improve.
• Asset purchase funded with cash on hand.
• Access to deeply discounted gas supply from the Permian Basin, which is expected to be sufficient to materially improve the economics of the Odessa plant and other existing West Texas power plants, although still insufficient to support new build CCGT in the region.
• Future gas supply optionality via access to three different gas pipelines.
• Hedging efficiencies with generation matched against TXU Energy's load position in the ERCOT West Zone.

Curt Morgan, Vistra Energy's chief executive officer, remarked:

"The Odessa plant is an efficient, well-maintained asset that will provide critical flexible generation capabilities to Luminant's ERCOT portfolio.

Perhaps even more important, the Odessa plant brings geographic diversity to the Luminant fleet, as it is ideally situated in West Texas to capture the current natural gas price advantage in the Permian Basin.  We expect this price advantage to continue for the next several years until adequate pipeline infrastructure is constructed to transport the large volumes of associated gas out of the region."

"Moreover, this transaction is consistent with Vistra Energy's strategy to opportunistically acquire more efficient and flexible gas-fired generation and renewable generation to support our retail business. By purchasing this asset at what we estimate to be a nearly 60 percent discount to new construction cost, and with a near-term fuel cost advantage, we believe the acquisition will provide incremental value to our shareholders in the years to come."

Pending the receipt of all necessary government approvals and the fulfillment of all other customary closing conditions, Vistra Energy anticipates the transaction will close in the third quarter of 2017.