Kinder Morgan sells 50% equity interest in Utopia Pipeline Project to Riverstone Investment Group

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Kinder Morgan sells 50% equity interest in Utopia Pipeline Project to Riverstone Investment Group

Kinder Morgan, Inc. (KMI) has announced that Riverstone Investment Group LLC (Riverstone) will become a 50 percent partner in the Utopia Pipeline Project located in USA.

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.

The Utopia Pipeline is a common carrier project that will include approximately 215 miles of new, 12-inch diameter pipeline constructed entirely within the state of Ohio (USA) from Harrison County to Fulton County. The pipeline will connect with an existing Kinder Morgan pipeline and associated facilities in order to transport ethane and ethane-propane mixtures to petrochemical 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 distributed to manufacturers, businesses and homes throughout the Great Lakes region.

The total project investment is estimated to be approximately US$500 million (excluding capitalized interest). The project is supported by a long-term contract with Nova Chemicals Corporation.

Credit Suisse acted as the exclusive financial advisor to KMI during this transaction.

Don Lindley, president of KMI’s Natural Gas Liquids (NGL), Products Pipelines, said:

“The Utopia pipeline will connect growing ethane supply sources in Ohio to the expanding petrochemical market in Sarnia, We are excited to welcome Riverstone as a partner in the Utopia project.”

Steve Kean, Kinder Morgan president and chief executive officer, stated:

“This is another step towards achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation. This agreement also demonstrates our ability to originate projects with attractive 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 strong project development, commercial, and operational expertise. We look forward to Utopia being a successful project and believe it will lead to other strategic partnerships on future projects.”

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