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Will This Sale Hurt KMP's Distribution?

Will Kinder Morgan's major pipeline interest sale affect its operating cash flow and ability to distribute to investors?

By Joel South and Taylor Muckerman – Dec 11, 2012 at 7:39PM EST

Kinder Morgan Energy Partners recently announced that it's selling its one-third interest in the Express-Platte pipeline system to Spectra Energy for approximately $380 million.

In this video, Joel South and Taylor Muckerman discuss the deal and whether it will effect Kinder Morgan's distribution. Joel says it won't, and that it's a good move for both companies.

As Joel points out, the pipeline represents just $15 million of annual cash flow for Kinder Morgan. That represents just one half of 1% of the company's total operating cash flow. In return, the company is receiving fair value for the asset and can redeploy the proceeds into its higher-return growth projects. The deal makes perfect sense for Kinder Morgan, and as Taylor notes, it gives the company $380 million to take elsewhere.

Will This Sale Hurt KMP's Distribution?

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