Kinder Morgan sells shares in Canada’s Pembina Pipeline for $764m

US-based pipeline operator Kinder Morgan (KMI) has announced the sale of its 25 million shares in Canada’s Pembina Pipeline, which it received as part of the latter’s acquisition of the outstanding common equity of Kinder Morgan Canada for $764m.

The sale of these shares aligns with the KMI’s previously announced plans to convert the shares into cash in a non-disruptive deal.

According to Kinder Morgan, the sale is also consistent with the company’s 2020 budget.

The proceeds from the transaction will be used by KMI towards debt clearance. It will also use a portion of the funds to create balance sheet flexibility this year.

In August, Pembina Pipeline initially signed agreements to buy Kinder Morgan Canada and the US portion of the Cochin pipeline for C$4.35bn ($3.28bn).

The Cochin pipeline system is a 1,810-mile, 12in-diameter multi-product pipeline spread across Fort Saskatchewan, Alberta, to Windsor, Ontario, Canada.

It connects Pembina’s Channahon, Bakken and Edmonton area assets and is attached to markets in Mont Belvieu, Conway and Edmonton.

The pipeline has a capacity to produce more than 110,000bpd on the Canadian portion and 95,000bpd on the US portion.

The strategic acquisition enables Pembina to enhance its market diversification as a provider of integrated services to hydrocarbon producers in Western Canada.

In September 2018, Kinder Morgan intended to divest the Canadian section of the Cochin pipeline, which transports light hydrocarbon liquids between the US and Canada.