Kinder Morgan, Inc. (NYSE: KMI) today announced that it has closed on the sale of a 25.5% equity interest out of its membership interest in Elba Liquefaction Company, L.L.C. (ELC) to an undisclosed financial buyer for approximately $565 million, subject to customary purchase price adjustments to reflect an economic effective date of July 1, 2022. These proceeds will reduce short-term debt and create additional capacity for attractive investments, including opportunistic share repurchases. The value of the equity interest implies an enterprise value of approximately $2.3 billion for ELC, which is approximately 13 times 2022E EBITDA. Upon closing, KMI and the undisclosed financial buyer will each hold a 25.5% interest and Blackstone Credit will continue to hold a 49% interest in ELC. Bracewell LLP served as legal advisor to KMI for this transaction. The ELC joint venture was formed in 2017 to construct and own the 10 modular liquefaction units in operation at Elba Island. KMI will continue to operate the facility.
“We are pleased to welcome a new partner into the ELC joint venture,” said KMI’s Interstate Natural Gas President Kimberly Watson. “Recent geopolitical events have proven how critical liquefied natural gas (LNG) infrastructure is to meeting global energy demand. We believe this investment further shows the value of LNG and demonstrates the important role it will play for decades to come.”
The Elba Liquefaction facility located on Elba Island in Chatham County, Georgia, is owned by ELC and includes 10 modular liquefaction units for a total capacity of approximately 2.5 million tonnes per year of LNG, which is equivalent to approximately 0.35 billion cubic feet (Bcf) per day of natural gas. ELC then delivers the LNG to Southern LNG Company, L.L.C. (SLNG) for export. KMI owns 100% of SLNG, which owns and operates the Elba Island LNG Terminal, including the LNG storage tanks and the ship dock for import and export. The facility is supported by a 20-year contract with Shell LNG NA, L.L.C., who is subscribed to 100% of the liquefaction capacity.
About Kinder Morgan, Inc.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. Access to reliable, affordable energy is a critical component for improving lives around the world. We are committed to providing energy transportation and storage services in a safe, efficient and environmentally responsible manner for the benefit of the people, communities and businesses we serve. We own an interest in or operate approximately 83,000 miles of pipelines, 141 terminals, 700 billion cubic feet of working natural gas storage capacity and have renewable natural gas generation capacity of approximately 2.2 Bcf per year of gross production with an additional 5.5 Bcf in development. Our pipelines transport natural gas, refined petroleum products, renewable fuels, crude oil, condensate, CO2 and other products, and our terminals store and handle various commodities including gasoline, diesel fuel, renewable fuel feedstocks, chemicals, ethanol, metals and petroleum coke. Learn more about our renewables initiatives on the low carbon solutions page at www.kindermorgan.com.
Important Information Relating to Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. Generally the words “expects,” “believes,” “anticipates,” “plans,” “will,” “shall,” “estimates,” and similar expressions identify forward-looking statements, which are not historical in nature. Forward-looking statements in this news release include express or implied statements concerning the transaction, including the expected closing, its timing and the anticipated benefits, and the long-term value of natural gas infrastructure. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although KMI believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance as to when or if any such forward-looking statements will materialize or their ultimate impact on KMI’s operations or financial condition. Important factors that could cause actual results to differ materially from those expressed in or implied by these forward-looking statements include the ability of the parties to satisfy customary conditions to closing of the transaction; and the other risks and uncertainties described in KMI’s reports filed with the Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K for the year-ended December 31, 2021 (under the headings “Risk Factors” and “Information Regarding Forward-Looking Statements” and elsewhere) and its subsequent reports, which are available through the SEC’s EDGAR system at www.sec.gov and on KMI’s website at ir.kindermorgan.com. Forward-looking statements speak only as of the date they were made, and except to the extent required by law, KMI undertakes no obligation to update any forward-looking statement because of new information, future events or other factors. Because of these risks and uncertainties, readers should not place undue reliance on these forward-looking statements.
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