On average, U.S. oil majors…
Russia is looking to gain…
In an effort to reduce its debt, Kinder Morgan is planning to sell a 50 percent of its stake in the Southern Natural Gas pipeline. The company announced the sale to Southern Utility Company on Sunday. The price for the sale was $1.47 billion. The sale will bring Kinder Morgan’s debt-to-income ratio below its target level.
Kinder Morgan also sold 50 percent of its Utopia pipeline in Canada last month. Last December, the company cut dividend payments to shareholders to keep enough cash on hand to manage its debts.
This spring, the company announced it would cut back on a number of projects following a drastic slump in the price of its stock. Kinder Morgan saw a drop from $41 to $13 in the period of April 2015 to January 2016. The stock stabilized after reports that two of large projects, the Trans Mountain oil pipeline in Canada and an LNG export project in Georgia, had received regulatory approval.
Kinder Morgan spokesman Dave Conover stated: “A significant advantage of this transaction is that we will be able to take the proceeds and immediately pay down debt. That’s something that senior management has been committed to, and it’s a very big deal for our shareholders. has been committed to, and it’s a very big deal for our shareholders.”
Steve Kean, chief executive for Kinder Morgan said: “The transaction significantly advances our effort to strengthen our balance sheet and move us closer to returning value to shareholders in the form of an increased dividend or stock repurchases.”
Related: Why Did China Grossly Overpay For A Utility In Brazil?
Thomas Fanning, the CEO of Southern, said that the move would will put the company in a position for “future growth opportunities and enhanced access to natural gas, which are expected to benefit customers and investors alike."
Lincoln Brown for Oilprice.com
More Top Reads From Oilprice.com:
Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…