Boston, MA 05/14/2014 (wallstreetpr) – Kinder Morgan Inc. (NYSE:KMI) will sign a $2 billion deal with El Paso Pipeline Partners LP (NYSE:EPB) in order to drop the natural gas assets. The deal, which will be signed in May 2014, also includes approximately $1 billion of proportionate debt at the Ruby and Gulf LNG. This will result in equity purchase price of $972 million.
Other things that will come along through this deal to El Paso
Through this deal, various other benefits will come to El Paso. El Paso, after the deal, will acquire Kinder Morgan Inc. (NYSE:KMI)’s 50% interest in Ruby Pipeline. Ruby Pipeline is the 42-inch diameter pipeline system which stretches from Wyoming to Oregon. The 680-mile ruby pipeline also facilitates natural gas supplies from Rocky Mountain basins to California, Pacific Northwest and Nevada customers.
El Paso Pipeline Partners LP (NYSE:EPB) will also acquire Kinder Morgan’s 50% interest in Gulf LNG terminal located in Pascagoula, Miss. The Gulf LNG terminal has the storage capacity of 6.6 billion cubic feet per day and also peak vaporization send-out capacity of 1.5 Bcf/d. Apart from this, The Gulf LNG terminal also has the proposal of developing Gulf LNG Liquefaction Project through which export capabilities and liquefaction facilities will be added to the existing terminal.
The deal will help El Paso in acquiring 47.5% interest in Young Gas Storage located in Morgan County, Colo. The Young Gas Storage offers the working natural gas storage capacity of around 6 Bcf.
How will the deal help El Paso and Kinder Morgan?
Through acquisition of the aforementioned assets, EPB unit holders will be able to enjoy greater and stable cash flow for a long period to come. At the same time, the deal will enable KMI to bring down the outstanding debt. Kinder Morgan Inc. (NYSE:KMI) will also be able to continue its participation in the cash flows from aforementioned assets through limited and general partner interests in El Paso.
Commenting upon the prospects of the deal, Chairman and CEO of El Paso Pipeline Partners LP (NYSE:EPB), Richard Kinder, in his statement said that the market conditions are a clear indication of America’s energy needs which can be satisfied through natural gas. Natural Gas offers abundant, clean, domestic and reasonably priced solution to the energy needs of America.
What is El Paso Pipeline Partners?
El Paso Pipeline Partners LP (NYSE:EPB) is the publicly traded pipeline limited partnership. The general partner of El Paso is owned by Kinder Morgan Inc. (NYSE:KMI), which is the 15th-largest public company of Houston, as per the Houston Business Journal research.
