Kinder Morgan Inc. as a combined company would be able to make sizable acquisitions in the natural gas and crude oil pipeline and processing sector, Chief Executive Officer Rich Kinder told investors on a conference call on Monday.
“We have such a broad platform, virtually anything in the midstream area would fit us,” Kinder said.
The company would not stray from its core business and start buying “truck lines and railroads,” he added.
Houston-based Kinder Morgan said on Sunday it would put all its publicly traded units under one roof in a $70-billion (U.S.) restructuring, responding to investor concerns about its growth prospects and complicated financial structure.
Under the deal, Kinder Morgan will consolidate master limited partnerships (MLPs) Kinder Morgan Energy Partners, El Paso Pipeline Partners LP and Kinder Morgan Management LLC, shedding the tax-advantage legal structure it had popularized, and organize instead as a C-corporation.
The deal is expected to close in the fourth quarter.
“This is no way a swipe at MLPs in general,” Kinder told investors. The proposed deal made sense for Kinder Morgan because the company had grown so large and was paying out so much of its cash to its general partners it was hindered in making acquisitions by a higher cost of capital, he said.
Investors welcomed the pipeline companies’ deal, sending units of Kinder Morgan Energy Partners up 14 per cent, El Paso Partners up 17 per cent and Kinder Morgan up 5 per cent.
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