The Israel-Iran battle in June 2025 rattled world inventory markets and intensified U.S. tariff-driven volatility. Oil costs surged as missiles struck Iran’s very important oil and fuel amenities. Fortuitously, the battle led to 12 days.
Whereas many individuals scrambled for safer property, a pipeline inventory remained unshaken amid the turmoil within the Center East. Keyera (TSX:KEY) superior 4% from June 13 in the beginning of the battle till the ceasefire settlement on June 24. The $9.8 billion Canadian midstream vitality firm even raised $2.1 billion in fairness choices on June 20 in preparation for the transformative acquisition of Plains All American Pipeline’s Canadian pure fuel liquids (NGL) enterprise.
Scale-changing mega deal
Keyera is a standout alternative for development and dividend buyers in 2025, owing to a transparent, lengthy development runway following the mega deal. Its President and CEO, Dean Setoguchi, mentioned, “This can be a extremely strategic acquisition that strengthens our core enterprise and accelerates our development trajectory.” BMO Capital describes the acquisition as a “scale-changing” occasion.
The transaction can also be anticipated to strengthen the dividend development profile of this vitality inventory. As of this writing, KEY trades at $42.86 per share and pays a profitable 4.9% dividend. Based mostly on market analysts’ 12-month value targets, the upside potential ranges from 18% to 40%.
Win-win association
Setoguchi admitted that Keyera has lengthy been eyeing Plains’ large-scale NGL enterprise. After six months of negotiations, the American agency agreed to promote its wholly owned Canadian subsidiary and choose U.S. property for $5.2 billion, opting to be a pure-play crude oil midstream play.
Included within the sale is pipeline infrastructure extending greater than 2,400 kilometres, producing over 575,000 barrels a day. Keyera hopes to generate $100 million in financial savings upon closing the deal in Q1 2026 and anticipates that this will even improve distributable money movement by a mid-teen share within the first 12 months.
Largest acquisition
Keyera’s main transfer enhances its robust begin to 2025. The property within the pipeline energy shift embrace extraction, fractionation, and storage operations, in addition to rail and truck terminals in Alberta, Saskatchewan, Manitoba, and Ontario. Setoguchi emphasised that the deal not solely repatriates necessary vitality property within the nation but in addition that money flows from the acquired operations shall be reinvested in Canada.
In Q1 2025, internet earnings climbed 83.8% to $130.3 million in comparison with Q1 2024. In keeping with Setoguchi, the primary quarter outcomes underscore the power and competitiveness of Keyera’s built-in worth chain. Notably, the fee-for-service realized margin elevated 9% year-over-year to $262 million.
The regular development in secure, fee-based money movement would allow future dividend will increase. Keyera has persistently paid dividends since 2003, though the payout frequency modified from month-to-month to quarterly beginning in 2023.
Canada takes centre stage
The Plains deal expands Keyera’s place and widens its attain from Western to Japanese Canada. Apart from gaining extra flexibility in market entry and a number of development catalysts, there’s fast worth for shareholders. Nevertheless, the larger image is that Canada takes middle stage as a worldwide vitality chief.
Keyera has strengthened its home infrastructure. Extra importantly, the deal ought to assist unlock the total potential of the nation’s vitality future. Its most sizeable transaction ever might translate into sizeable positive factors and sustainable dividend funds for buyers. I like to recommend taking a place in KEY now earlier than the upcoming breakout.
