Kinder Morgan Inc. (KMI) will sell its remaining Canadian assets to Pembina Pipeline Corp. for C$4.35 billion ($3.3 billion) in cash and stock.
Calgary-based Pembina agreed to pay KMI C$2.05 billion ($1.54 billion) in cash for the United States segment of the cross-border Cochin Pipeline that moves light condensate, a natural gas liquid (NGL) byproduct, into Canada. The sale, which was announced on Wednesday, completes KMI’s exit from Canada. It is expected to close by 1Q2020.
For KMI’s 70% ownership of Calgary-based Kinder Morgan Canada Ltd., the Houston firm will take 25 million Pembina shares valued at $2.5 billion.
Pembina President Mike Dilger described the transaction as a “highly strategic” acquisition of integration and growth platforms for essential oil and NGL byproduct services.
The deal includes a 10 million bbl Alberta oil storage and trading terminal and a Vancouver Harbor marine shipping wharf, as well as the 110,000 b/d Cochin Pipeline that runs from Chicago to Alberta.
“It represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the U.S. through a highly desirable cross-border pipeline,” Dilger said.
On the American side of the transaction, KMI CEO Steve Kean said the deal would allow the company “to reduce leverage and gives us the flexibility to create additional value for shareholders through share buybacks, project investments, or both.”
KMI’s departure from Canada began with a mid-2018 sale of Trans Mountain Pipeline to the Canadian government for C$4.5 billion ($3.4 billion) after environmental, indigenous and political opponents stalled its expansion project.