Blog Coverage: Kinder Morgan Makes Final Investment Decision on Trans Mountain Expansion Project; Pays C$1.75 billion for the IPO
Upcoming AWS Coverage on Williams Partners Post-Earnings Results
LONDON, UK / ACCESSWIRE / May 30, 2017 / Active Wall St. blog coverage looks at the headline from Kinder Morgan, Inc. (NYSE: KMI) as the Company announced on May 25, 2017, a final investment decision for the Trans Mountain Expansion Project. This announcement was made in conjunction with Kinder Morgan Canada Limited, its indirect subsidiary, and will see the Company initially pay C$17.00 per share for a total 102.9 million shares of the common stock for total gross payment of C$1.75 billion. The final investment decision is dependent on the successful completion of the Initial Public Offering (IPO) which is expected to take place by no later than May 31, 2017. Register with us now for your free membership and blog access at:
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One of Kinder Morgan's competitors within the Oil & Gas Pipelines space, Williams Partners L.P. (NYSE: WPZ), announced on May 04, 2017, its financial results for Q1 2017 which ended on March 31, 2017. AWS will be initiating a research report on Williams Partners in the coming days.
Today, AWS is promoting its blog coverage on KMI; touching on WPZ. Get all of our free blog coverage and more by clicking on the link below:
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The Announcement
Kinder Morgan announced that upon the completion of the IPO, it would have secured sufficient financing for the Trans Mountain Expansion Project. Since receiving the Government of Canada's approval, the Company announced on March 09, 2017, that Trans Mountain has been moving forward with commercial, regulatory, and construction planning aspects of its expansion project.
The Company plans to pay the balance of the $7.4 billion project through its cash flow, which is about $4.5 billion annually. The KML IPO is one of the largest ever in Canada and allows Canadian investors to acquire leading integrated midstream set of western Canadian assets.
The Trans Mountain Project
The Trans Mountain Expansion project is a C$7.4 billion project, which includes a remaining cash spend of C$6.2 billion as of March 31, 2017, which upon completion, will deliver western Canadian oil producers with an additional shipping capacity of 590,000 barrels per day, resulting in total pipeline capacity of 890,000 barrels per day, and tidewater access to the western United States and different global markets.
The project currently transports about 300,000 barrels per day of crude oil and refined petroleum products from the oil sands in Alberta to Vancouver, British Columbia and Washington State. This project is underpinned by 15- and 20-year shipper commitments of 707,500 barrels per day, or roughly 80% of the capacity on the expanded pipeline, with the remaining 20% reserved for spot volumes required by the National Energy Board Construction, where the project is expected to begin in September 2017 and is expected to close by December 2019.
The Offering
The Company announced that the offering includes the sale of a portion of KMI's interest in the Canadian business of KMI (the Business). Composed of Trans Mountain pipeline system and related terminal assets, the Puget Sound Pipeline, the Jet Fuel pipeline system, and the Canadian portion of the Cochin pipeline system; this offering will be made so as to pay down KMI's debt. As a result, KMI now expects to end the year at about 5.2x debt to EBITDA against its budget of 5.4x and remains on a track to announce revised dividend guidance for 2018 in the second half of 2017.
According to the Company, the final cost estimate and the increased tolls led to an updated project cost of C$7.4 billion. The higher project cost can be attributed to the cost associated with the NEB's 157 conditions and project changes, resulting from public feedback, namely, thicker pipe wall, additionally drilled crossings in environmentally sensitive areas and the Burnaby Mountain tunnel.
Stock Performance
At the close of trading session on Friday, May 26, 2017, Kinder Morgan's stock price was slightly down by 0.88% to end the day at $19.25. A total volume of 10.48 million shares were exchanged during the session. The stock has advanced 7.42% in the last twelve months. The Company's shares are trading at a PE ratio of 63.32 and have a dividend yield of 2.60%. The stock currently has a market cap of $43.35 billion.
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