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.
Joel South, Taylor Muckerman, and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend ONEOK. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.