Kinder Morgan to Put Up Half of Southeastern Pipeline System For Sale


The country’s leading operator of natural gas pipelines, Kinder Morgan, announced Sunday that it is putting up half of its southeastern pipeline system for sale. The sale’s main intention is to bring down debt accrued over the course of the lengthy energy slump.

Southern Company, an electrical and gas utility firm, will pony up $1.47 billion for a 50 percent equity interest in the pipeline system. The 7,600-mile network links natural gas sources alongside the Gulf Coast to Alabama, Georgia, and South Carolina.

Kinder Morgan spokesman, Dave Conover said, “A significant advantage of this transaction is that we will be able to take the proceeds and immediately pay down debt,” he also added, “That’s something that senior management has been committed to, and it’s a very big deal for our shareholders.”

Conover also said that the proceeds of the sale, along with the company’s decision to sell half of its Utopia project in Canada last month, should be sufficient to ease Kinder Morgan’s immediate cash crunch. Kinder Morgan also believes the agreement could come with additional expansions of the pipeline system to serve Southern Company’s patrons in the area.

Last December, the company slashed its dividends to shareholders by 74 percent to conserve cash while struggling to manage growing debts. Kinder Morgan says it doesn’t anticipate the sale to alter the company’s credit rating.

The company announced in spring that it was cutting back on a bundle of scheduled projects. The decision came with the intention of retaining profitability after its stock fell from a $44 high in April 2015 to a $13 low in January 2016. The stock has since become stable with the news that two major projects had been consented by regulatory authorities: a liquefied natural gas export facility in Georgia and the Trans Mountain oil pipeline in Canada.

Article written by HEI contributor Briana Steptoe.

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