$3.3 Billion Deal to Acquire Kinder Morgan Canada, Cochin Pipeline by Pembina

Houston-based Kinder Morgan has agreed to sell Kinder Morgan Canada and the U.S. portion of the Cochin Pipeline system to Calgary-based Pembina Pipeline Corp in a US$3.3 billion deal.

The deal will expand Pembina's crude oil storage capacity and is expected to close late in the fourth quarter of 2019 or in the first quarter of 2020, subject to customary closing conditions, including KML shareholder and regulatory approvals.

The sale includes a significant crude oil storage and terminal business in Western Canada's key energy complex, including the Edmonton storage and terminal business and Vancouver Wharves, a bulk storage and export/import business.

The transaction includes 100% of the Cochin Pipeline system, including the Canadian portion owned by Kinder Morgan Canada and the U.S. portion, which accounts for nearly half of the deal US$1.54 billion. The Cochin pipeline system consists of 1,180 miles of pipeline that can transport 95,000 barrels per day.

"(The acquisition) represents an ideal opportunity to continue building on our low-risk, long-term, fee-for-service business model while extending our reach into the U.S. through a highly desirable cross-border pipeline, said Mick Dilger, Pembina's president and CEO. "Further, it will enhance our diversification as well as Pembina's customer service offering as a leading provider of integrated services to hydrocarbon producers in Western Canada."

This is an attractive transaction for (Kinder Morgan) KMI and (Kinder Morgan Canada) KML stockholders,” said Steve Kean, CEO of Houston-based Kinder Morgan. “It enables KMI to reduce leverage and gives us the flexibility to create additional value for shareholders through share buybacks, project investments, or both.”