Whether you sell all now or stay for the conversion, the same tax consequences will result either way (in an IRA). As for future prices, who knows?
With 330 share, you won't get into any big trouble with the IRS. I'd say sit tight and let the units convert to KMI shares. C-corp stock is actually better to have in an IRA.
Mebellibm, you have until April 15th of 2015 to raise the money for the incremental tax you will owe because of this deal. As long as your estimated tax payments for 2014 equal or exceed your tax liability for 2013, there is no underpayment penalty regarding your estimated payments. So just make sure that your estimated payments for 2014 at least equal your 2013 final liability, then sell some of your greatly appreciated KMI stock in 2015 to raise the cash for your big payment in April of 2015.
It's not like this is a huge unexpected acquisition of some unrelated company with vague promises of synergy. Investors and analysts have been complaining for over a year that Kinder Morgan is too complex, and that the IDR load is too burdensome. Now those problems are solved. No reason for KMI's price to go down. I predict KMI will be up tomorrow, with continued advancement to year end.
alexalekhine, yes, high pressure interstate natural gas pipelines are generally (probably always) run through sparsely populated areas. An interstate pipeline is meant to cross an entire state, so there is usually no reason for it to be routed through any town or city. The pipeline may provide gas to a town or city, and in such case an offshoot pipe from the major line (called a lateral line) usually terminates at a "city gate" location, usually an industrial area away from residences. The interstate line connects to a lower pressure gas line of the local distribution company (local utility). The local utility's pipes connect to individual and commercial gas customers.
In most of the U.S., usually the only people whose property might have an interstate pipeline on it are farmers. There are set-back requirements, and a right of way that is clearly identifiable. Maybe in more densely populated areas, large cities, the pipeline would be on a utility corridor (already existing and clearly identified) that is surrounded by residential areas.
No individual homeowner ever has a high pressure interstate gas pipeline in his backyard where he would, for example, drive his lawnmower over the pipeline. Interstate gas pipelines are not low pressure local utility lines. They are not put just anywhere.
Most of the U.S. is crisscrossed with natural gas pipelines. Somehow life goes on. A homeowner would have to have a very large backyard to have the pipeline run through it. Central Massachusetts is not the first place in the country to have a new pipeline running through it underground.
I've read in the Wall Street Journal that the stabilization and distillation required under the Pioneer and Enterprise ruling is a lot less than what the current crop of "splitters" like Kinder's are designed to do. The level of refinement under the ruling can be do in the field for tens of millions $, rather than hundreds of millions ($360 million for Kinder) for the splitters now in the works. Kinder's splitter is under LT contract with BP, I believe, so the financial risk is somewhat removed. Possibly regular splitters are still usable and may perform a needed function.
And, apparently the ultra light crude allowed under the ruling is more explosive, so pipelines aren't eager to handle it in the normal way. We need to learn more. Also, Kinder has many ways of making money in the energy industry, so the splitter many not be that significant either way.
That's what all that non-cash depreciation will do to a company. It will reduce its book value. Did its real value go down? Did the unitholder receive cash distributions related to the depreciation expense there were treated as return of capital?
Why would oil companies including Suncor, Cenovus, Nexen, Total SA, Huskey, and BP Canada have signed precedent or binding agreements to ship oil on the new or expanded Gateway and Transmountain pipelines if they were not certain that the crude product was usable and shippable in ocean going tankers? Your concern about these aspects of the projects is like me worrying that a new farm tractor that John Deere plans to sell is so heavy that it will sink into farmer's fields. The people who manage businesses aren't idiots.
As for exporting LNG, US law prohibits the export of natural gas to countries that don't have free trade agreements with the US. The free trade countries generally don't need our natural gas, or the are in North America and would get the gas pipelined to them, rather than tinkered as LNG. So federal law is what has delayed US LNG exports. Five years ago the shale revolution was not widely known. Even today, there are doubters that its for real.
Transmountain began operations in 1953, long before the Alberta tars sands projects began producing heavy crude. Transmountain's web site indicates that they transport crude, semi-refined, and refined products, each in separate batches, or runs. Tar sands bitumen, when it is piped, is piped as diluted bitumen. So the existing Transmountain line does not solely transport tar sands crude, although I believe the new twin segment would have carried tar sand crude only.
I vaguely recall that N. Gateway's condensate line from Kitimat would be flowing recycled (recovered) condensate from the tar sands crude transported into Kitimat. Transmountain's new line would have to do the same, it seems.
Avanderclausen, when you write that "kinder isn't getting paid for it", it's not clear what you are referring to.
As for the sand remaining in the diluted bitumen, that not an investor's concern. Nor is some sloshing of the product in the tankers our concern. Just imagining something that sounds disagreeable, and concluding that one doesn't like the project, on the basis of imagination, doesn't make sense. Need to specify what harm, if any, is being done.
You think Enbridge or Kinder would build or expand a pipeline and THEN find out that the port "facility" is not interested in pumping it, and that no tanker can haul it? You are not an investor, I take it. You don't know that businesses don't make colossal mistakes like that. If I suspected that businesses don't think things thru, then I wouldn't invest either. I'd be a lot poorer, and have to work for a living, if I could find employment.
I recall KM saying that the ships could be used in transporting crude or product from the Gulf of Mexico to the US west coast. So they should be able to pass thru at Panama. And Jones Act tankers should also be able to engage in international trade, except that they are more costly to operate with US crews, so why use they? All domestic shipping must use Jones tankers.
I can't find any discussion about how the Canadian government's approval of Enbridge's Gateway pipeline impacts Kinder's plans for twinning TransMountain. I suppose, at some point, unless the tars sand fields are shut down, they will be looking for more pipeline capacity to the west coast, and TransMountain will get the nod. In the mean time, TransMountain wlll continue to be the only route to the west coast for several years to come.
Arbtrdr, all's well that ends well. Maybe they are not at the end yet, but it looks like KMI is confident regarding the funding of EPB's 2014 acquisitions. The market price of EPB units didn't take a dive today. That's much better than I had expected. The equity portion will be raised over the next two years apparently. I guess they can say the acquisition is immediately accretive to EPB because they have a good fix on what the interest rate on the debt will be. And hopefully when more equity is raised at a later time, the unit price will not be depressed for irrational reasons (Hedgeye, merger with KMP, disfavored son, still lower pipeline recontracting rates, etc.).
Regarding raising EPB's distributions, it was the announcement on December 5th that EPB's distribution would be frozen for two years that broke the "spell." The news was sudden and abrupt, and within a month EPB was down 10 points. Had KMI been able to guide the distribution down with a small 1 cent quarterly increase, maybe the market would not have panicked the way it did, and the spell would not have been broken. The one cent increase would have cost nothing, and we'd have a unit price that would get the acquisition done immediately in the standard 50-50 debt equity ratio.
As for getting rid of the GP interest, I'll have to read more about what happened at EPD. I regard the MLP's as tools of the sponsors. There's never really a conflict of interest. If the sponsor hurts the common unitholders, the sponsor will feel the pain, and will correct their mistake.
I have a high regard for Kinder Morgan management, but they are human and can make mistakes. I bet if they could go back to December 4th, they would do things differently regarding EPB, rather than go thru that unexpected 12 point decline in EPB's price in barely 6 months.