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article imagePembina to buy Kinder Morgan Canada, part of Cochin pipeline

By Karen Graham     Aug 21, 2019 in Business
On Wednesday, Pembina Pipeline Corp. announced it had signed a deal to buy Kinder Morgan Canada Ltd. and the U.S. portion of the Cochin pipeline system in an agreement valued at C$4.35 billion.
The Transaction values Kinder Morgan Canada at approximately $2.3 billion, or $15.02 per share, according to the news release.
Pursuant to the closing of the deal, Pembina's Board of Directors also approved an increase in its monthly dividend by a penny per share to 21 cents.
"This acquisition is highly strategic for Pembina, providing enhanced integration with our existing franchise, entrance into exciting new businesses and clear visibility to creating long-term value for our shareholders," said Pembina CEO Mick Dilger, according to CTV News Canada.
"It represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the U.S. through a highly desirable cross-border pipeline."
Wisconsin State Energy Office
The Cochin Pipeline
The Cochin Pipeline, owned in partnership by Kinder Morgan Canada and its American parent, Kinder Morgan Inc., commenced operations in 1979. The pipeline runs 2,900 kilometers (1,802 miles) from Chicago, Illinois to Fort Saskatchewan, Alberta, and has a design capacity of up to 110,000 barrels per day.
Cochin originally moved products (mainly propane in recent years) eastward from Fort Saskatchewan to Windsor, Ontario. In March 2014, the direction of flow on the segment of the Cochin Pipeline from Kankakee, Illinois, to Fort Saskatchewan was reversed to transport condensate - which is used to dilute oilsands bitumen to allow it to flow in a pipeline.
Besides the Cochin Pipeline System, the deal also includes the Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export/import business, according to CBC Canada.
"We believe KML's assets will be a great fit with Pembina's business and this transaction is highly beneficial to KML's shareholders," said Steve Kean, CEO of both Kinder Morgan Canada and its 70 percent owner, U.S.-based Kinder Morgan, Inc. "This transaction gives KML's public shareholders the opportunity to participate in a larger and growing platform of North American midstream energy assets."
Readers may remember that Kinder Morgan Canada was spun off from its American parent in mid-2017 to raise money to build the Trans Mountain pipeline expansion but it sold the pipeline and its expansion project to the federal government for $4.5 billion last summer.
More about Pembina pipeline, Kinder Morgan Canada, Cochin pipeline system, condensate, Business
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