One of the largest natural gas pipeline operators in USA, Kinder Morgan, has made an official announcement on July 10 that they are selling 50% of its stake in the southeastern pipeline system. Southern Company is buying half of the equity interest in the Southern Natural Gas pipeline system, which will be continued to be operated by Kinder Morgan. This agreement between the electrical and gas utility Southern Company and Kinder Morgan will focus on the pursuit of certain growth opportunities for developing the natural gas infrastructure.
The prolonged course of the current energy downturn has resulted in Kinder Morgan accumulating substantial debt. By selling half of its southeastern pipeline system, it will immediately help the company to reduce its overall debt, says Dave Conover, a spokesperson of Kinder Morgan.
According to the reports, the Southern Company will pay $1.47 billion to acquire half of the equity interest in the pipeline network that stretches 7,600 miles by connecting natural gas sources along the Gulf Coast to South Carolina, Alabama and Georgia.
"We plan to use all of the proceeds from this transaction to reduce debt at KMI. This is another step towards achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation,” said Steve Kean, the President and CEO of Kinder Morgan.