Kinder Morgan, Inc. Completes Acquisition of El Paso Corporation
24 Mayo 2012 - 9:21AM
Business Wire
Kinder Morgan, Inc. (NYSE: KMI) today announced that it has
completed its acquisition of El Paso Corporation (NYSE: EP), which
was announced in October of 2011. Combining the two companies makes
Kinder Morgan the largest midstream and the fourth largest energy
company (based on combined enterprise value) in North America.
Under the terms of the agreement, the transaction will be effective
as of 12:01 a.m., New York City time, on May 25, 2012.
“We are delighted to close the El Paso transaction and we are
very excited about the natural gas footprint that we now have in
the United States with the addition of approximately 44,000 miles
of natural gas pipelines from El Paso,” Richard D. Kinder, chairman
and CEO of Kinder Morgan stated. “We are bullish on the future of
natural gas and believe that it will be the fuel of choice in
America for many years to come. It’s domestically abundant, clean
and cheap. As the largest transporter and storage operator of
natural gas in the United States, we have many growth opportunities
across the country, and we are eager to get to work to leverage
these assets for the benefit of our customers, our shareholders and
our employees.”
Sale of Exploration and Production Assets
Completed
The approximately $7.15 billion sale of El Paso’s exploration
and production business (EP Energy) to affiliates of Apollo Global
Management, LLC and others, which was announced in late February,
has also closed. As previously announced, El Paso’s net operating
loss carryforwards will largely offset taxes associated with the
sale of the exploration and production business, and thus almost
the entire proceeds from this sale will be used to reduce
substantially the debt incurred by KMI to fund the cash portion of
its purchase of El Paso.
Integration and Growth
Expectations
“I’m very pleased with the herculean effort that has occurred
over the past several months to combine Kinder Morgan and El Paso,”
Kinder said. “The integration planning effort was managed and fully
staffed by personnel from the two organizations, ensuring that the
people who understand best how to operate these assets are
establishing how they will be managed moving forward. This has
required a tremendous amount of work by a large number of people
who are still responsible for their normal jobs. The value of their
contributions will be realized by the combined organization for
many years to come.”
The El Paso acquisition is expected to be nicely accretive to
KMI. The company now anticipates cost savings in excess of $400
million per year, significantly higher than the previously
announced projection of approximately $350 million per year. These
cost savings will benefit KMI, Kinder Morgan Energy Partners, L.P.
(NYSE: KMP) and El Paso Pipeline Partners, L.P. (NYSE: EPB). KMI
previously announced that, excluding the impact of the El Paso
transaction, it expected to declare dividends of $1.35 per share
for 2012. Now, incorporating the impact of the El Paso transaction,
KMI expects to declare dividends of at least $1.40 per share for
2012. KMI also intends to recommend to its board of directors a
dividend of $0.35 per share for the second quarter of 2012. KMP
(and KMR) expects to meet or exceed its previously announced budget
to declare distributions of $4.98 per unit (per share for KMR) for
2012.
Dropdowns and KMP Transactions
El Paso Pipeline Partners, L.P. (NYSE: EPB) has completed its
purchase of the remaining 14 percent interest in Colorado
Interstate Gas and all of Cheyenne Plains Pipeline from El Paso for
$635 million and the assumption of approximately $242 million
of proportional debt. This transaction is expected to be
immediately accretive to EPB’s distributable cash flow.
As previously announced, KMI agreed to divest certain KMP assets
to obtain Federal Trade Commission approval for the El Paso
transaction. KMI has agreed to sell Kinder Morgan Interstate Gas
Transmission, Trailblazer Pipeline Company, its Casper-Douglas
natural gas processing and West Frenchie Draw treating facilities
in Wyoming, and the company’s 50 percent interest in the
Rockies Express Pipeline. The company has six months from the
commission’s May 1, 2012, order to sell the assets.
Also as previously announced, KMI plans to offer assets to KMP
to replace the divested assets. The company expects to drop down
all of Tennessee Gas Pipeline and a portion of El Paso Natural Gas
contemporaneously with the close of KMP’s divestitures, which are
expected to occur in the third quarter this year. It is expected
that the combination of the divestitures and the dropdowns will be
neutral to KMP’s distribution per unit in 2012 and accretive
thereafter.
In April, KMP announced an agreement with an investment vehicle
affiliated with Kohlberg Kravis Roberts & Co. L.P., whereby KMP
will acquire a 50 percent interest in the joint venture that owns
the Altamont gathering, processing and treating assets in the Uinta
Basin in Utah and the Camino Real gathering system in the Eagle
Ford Shale in Texas for $300 million in KMP common units. El Paso
owns the other 50 percent of the joint venture. Upon closing,
Kinder Morgan will own 100 percent of the joint venture, 50 percent
at KMI and 50 percent at KMP. The transaction is expected to close
in early June and to be immediately accretive to KMP’s
distributable cash flow.
Board of Directors
KMI announced today that Anthony W. Hall, Jr., and Robert F.
Vagt have been named to the KMI board of directors. As previously
announced, two members of El Paso’s board were to join the KMI
board following completion of the transaction. Hall served as a
director at El Paso since 2001 and was a member of the Audit
Committee and the Health, Safety & Environmental Committee.
Hall has been engaged in the private practice of law since 2010 and
previously served as chief administrative officer of the City of
Houston. Vagt served as a director at El Paso since 2005 and
chaired the Health, Safety & Environmental Committee and was a
member of the Compensation Committee. He has served as president of
The Heinz Endowments since 2008.
The EPB board of directors will be comprised of the same three
outside directors who were serving prior to the Kinder Morgan-El
Paso transaction, along with four Kinder Morgan officers who will
replace the El Paso officers who had been on the board. Richard D.
Kinder will serve as Chairman of the EPB board. Additionally,
existing Kinder Morgan senior officers will serve in their same
roles as officers of all of the publicly traded Kinder Morgan
entities, including EPB.
About Kinder Morgan
Kinder Morgan is the largest midstream and the fourth largest
energy company (based on combined enterprise value) in North
America with an enterprise value of over $90 billion. It owns an
interest in or operates approximately 75,000 miles of pipelines and
180 terminals. Its pipelines transport natural gas, gasoline, crude
oil, CO2 and other products, and its terminals store petroleum
products and chemicals and handle such products as ethanol, coal,
petroleum coke and steel. Kinder Morgan, Inc. (NYSE: KMI) owns the
general partner interest of Kinder Morgan Energy Partners, L.P.
(NYSE: KMP) and El Paso Pipeline Partners, L.P. (NYSE: EPB), along
with limited partner interests in KMP, Kinder Morgan Management,
LLC (NYSE: KMR) and EPB. For more information please visit
www.kindermorgan.com.
This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Although Kinder Morgan
believes that its expectations are based on reasonable assumptions,
it can give no assurance that such assumptions will materialize.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements herein
include those enumerated in Kinder Morgan’s Forms 10-K and 10-Q as
filed with the Securities and Exchange Commission.
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