Kinder Morgan, Inc. announced plans to contribute $300 millionin assets to Kinder Morgan Energy Partners, L.P., the company’smaster limited partnership. The largest asset to be contributed isKinder Morgan Texas Pipeline, formerly MidCon Texas, a 2,600-milenatural gas pipeline system that extends from South Texas toHouston along the Texas Gulf Coast.

Other assets include the Casper and Douglas Gas Gathering andProcessing Systems, KMI’s 50% interest in Coyote Gas Treating andKMI’s 25% interest in Thunder Creek Gas Services. As considerationfor the assets, KMI will receive $300 million, 50% in cash and 50%in KMP partnership units. KMI expects the transaction to becompleted in the fourth quarter.

“This transaction represents a true win-win for both KMI andKMP,” said Kinder Morgan CEO Rich Kinder. “It is expected to beaccretive to cash available for distribution to KMP’s unitholdersby between 5-10 cents in 2001. The pipeline assets are a good fitfor KMP because they complement existing KMP assets, have long-termcontracts in place and offer significant growth opportunities.”Kinder noted that because the mix of consideration paid willinclude equity issued to KMI, it will not be necessary to raisefunds for the transaction via a public offering of KMP units.

“KMI will also benefit from the transaction, as it will be ableto reduce its debt by $150 million,” Kinder said. “Additionally,the transaction is expected to be modestly accretive to KMI’searnings per share in 2001. By increasing its stake in the masterlimited partnership, KMI will enjoy greater participation in theexpected future growth of KMP.”

Upon closing, KMP will have completed in excess of $600 millionof acquisitions in 2000. In addition, this transaction will boostKMI’s total asset contribution to KMP to more than $1 billion, farexceeding the original goal stipulated when Kinder Morgan mergedwith KN Energy last July.

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