Cadiz to convert California gas pipeline to carry water with $20 million loan
(UI) – Cadiz, Inc. has completed a financing transaction that significantly strengthens its financial position and provides the company with liquidity to accelerate development of its water supply projects in Southern California. The financing includes a new $20 million loan to fund operations and capital expenses associated with development of the company's water supply projects and extends all debt maturities to 2027.
"This financing puts us in position to be delivering water before the next drought hits California," said Susan Kennedy, Chairman and Chief Executive Officer of Cadiz.
Cadiz owns 45,000 acres of land in the Mojave Desert with 2.5 million acre-feet of water supply, 1 million acre-feet of water storage capacity and more than 200 miles of pipeline assets that stretch across Southern California. In 2022, the Company also acquired ATEC Water Systems, a producer of specialized groundwater filtration systems.
The aquifer system at Cadiz presently holds at least 30 million acre-feet of water – more than the design capacity of Lake Mead, the largest reservoir in the U.S. In 2020 the company acquired a 220-mile idle gas pipeline from El Paso Natural Gas that transects other major water systems in Southern California ("Northern Pipeline"). To convert the pipeline to carry water, the company needs to build pumping stations and connection facilities that enable water to be transferred and exchanged between public water agencies in San Bernardino, Kern and Riverside counties.
Cadiz anticipates project design, engineering and development of the Northern Pipeline will take place in 2024, with construction beginning in 2025 and commencement of water delivery as early as 2026. The company recently announced execution of water supply agreements for delivery of 10,000 acre-feet per year (AFY) via the Northern Pipeline at a price not to exceed $1,650 per AFY. The Company expects to complete negotiations for delivery of the full capacity of the Northern Pipeline (25,000 AFY) by mid-2024.
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