Houston, Texas (June 28, 2016) -Kinder Morgan, Inc. (NYSE: KMI) announced today that Riverstone Investment Group LLC (Riverstone) will become a 50 percent partner in the Utopia Pipeline Project. To acquire its ownership interest, Riverstone agreed to an upfront cash payment provided at closing, consisting of reimbursement to KMI for its 50 percent share of prior capital expenditures related to the project and a payment in excess of capital expenditures to recognize the value created by KMI in developing the project to this stage.
In addition to the acquisition of the existing assets, Riverstone has agreed to fund its share of future capital expenditures necessary to complete const ruction and commissioning of the pipeline project. The total project cost is estimated to be approximately $500 million (excluding capitalized interest).
“The Utopia pipeline will connect growing ethane supply sources in Ohio to the expanding pet rochemical market in Sarnia,” said Don Lindley, president of KMI’s Natural Gas Liquids (NGL), Products Pipelines. “We are excited to welcome Riverstone as a partner in the Utopia project.” The project is supported by a long-term cont ract with Nova Chemicals Corporation.
“This is another step towards achieving our stated goals of st rengthening our balance sheet and positioning the company for long-term value creation,” said Steve Kean, Kinder Morgan president and chief executive officer. “This agreement also demonst rates our ability to originate projects with att ractive returns that partners are willing to pay to participate and invest in.”
Baran Tekkora, Partner at Riverstone, said, “The principals of Kinder Morgan and Riverstone have a long history of working together and we are happy to be partners again. Kinder Morgan has a proven management team with st rong project development, commercial, and operational expertise. We look forward to Utopia being a successful project and believe it will lead to other st rategic partnerships on future projects.”
The Utopia Pipeline is a common carrier project that will include approximately 215 miles of new, 12-inch diameter pipeline const ructed entirely within the state of Ohio from Harrison County to Fulton County. The pipeline will connect with an existing Kinder Morgan pipeline and associated facilities in order to t ransport ethane and ethane-propane mixtures to pet rochemical companies operating in Ontario, Canada, for use as a feedstock in the production of plastics that will ultimately be made into automotive parts, bottles, containers, home furnishings and other common plastic products. These products will be dist ributed to manufacturers, businesses and homes throughout the Great Lakes region.
Credit Suisse acted as the exclusive financial advisor to KMI during this t ransaction.
Kinder Morgan, Inc. (NYSE: KMI) is the largest energy infrast ructure company in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and approximately 180 terminals. The company’s pipelines t ransport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store pet roleum products and chemicals, and handle bulk materials like coal and pet roleum coke. For more information please visit www.kindermorgan.com . Riverstone is a global energy and power-focused private equity firm founded in 2000 by David M. Leuschen and Pierre F. Lapeyre with over $34 billion of capital raised.
Riverstone conducts buyouts and makes growth capital investments in the midst ream, exploration and production, oilfield services, power and renewable sectors of the energy indust ry. With offices in New York, London, Houston and Mexico City, the firm has committed over $31 billion to more than 120 investments in North America, Latin America, Europe, Africa and Asia. More information about Riverstone can be accessed at www.riverstonellc.com .