Kinder Morgan plans billions in 2020 project, JV spending

Houston-based Kinder Morgan Inc. (NYSE: KMI) plans to spend about $2.4 billion on expansion projects and joint ventures in 2020, according to a press release.

That’s in line with recent ranges the midstream company has been eyeing.

As of the end of the third quarter, Kinder Morgan had $4.1 billion in capital projects on its backlog, and it plans to spend between $2 billion and $3 billion each year on organic investment opportunities, according to a November presentation to its shareholders. In-service dates for projects on the backlog range from the fourth quarter of 2019 to 2023, the company said in the presentation.

“Capital projects are a high priority of ours. We spend $2 billion to $3 billion a year on capital projects, and we think that’s going to continue, certainly for the foreseeable future,” said Dax Sanders, the company’s executive vice president and chief strategy officer.

Sanders was speaking at the November investor presentation.

Pembina deal

The company also expects to sell its Canadian subsidiary and an associated pipeline to Calgary-based Pembina Pipeline Corp. (NYSE: PBA) for $2.5 billion by the first half of 2020. The company’s budget expectations right now anticipate using the proceeds from that deal to pay down debt, which would create about $1.2 billion of flexibility in the balance sheet that Kinder Morgan could use to repurchase shares or for other growth projects, the company said.

Kinder Morgan concluded a strategic review of the Canadian subsidiary in May and at the time had decided to continue to operate the company and hold on to its 70 percent share. KML was initially offered on public markets as a way of funding an expansion to the Trans Mountain pipeline, but the company completed the $3.46 billion sale of the Trans Mountain assets and expansion project to the Canadian government in the third quarter of 2018.

During the strategic review, Kinder Morgan considered selling its 70 percent interest in the Canadian subsidiary or buying back the 30 percent it doesn’t already own. The review included two bidding rounds and discussions with potential buyers, but Kinder Morgan ultimately decided the deals offered at the time weren’t satisfying.

By Joshua Mann  – Senior reporter, Houston Business Journal

Courtesy of Houston Business Journal

https://www.bizjournals.com/houston/news/2019/12/05/kinder-morgan-plans-billions-in-2020-project-jv.html