Kinder Morgan's Canadian Unit Prices IPO at C$17
According to recent reports, energy transportation and storage company Kinder Morgan, Inc.’s KMI Canadian subsidiary is likely to garner C$1.75 billion ($1.3 billion) from its initial public offering (IPO).
The company has finalized the price of its shares at C$17 each. This is below the previous range of C$19–C$22, per the terms of the deal.
However, Kinder Morgan has increased the number of shares it will sell in the IPO to 102.9 million from about 92.1 million as agreed previously. Therefore, the proceeds from the deal are likely to remain unchanged. The company will retain 70% of Kinder Morgan Canada after selling the shares, down from 75% planned earlier.
Kinder Morgan is spinning off the subsidiary, which includes the Trans Mountain pipeline system as well as other assets.
Kinder Morgan recently announced about its Canadian unit’s decision to file for an IPO of restricted voting shares to raise funds for its $5.48 billion Trans Mountain project expansion.
Notably, Kinder Morgan was considering the possibility of either an IPO or a joint venture, with the project startup scheduled for later this year in either case.
The 1,150 kilometer Trans Mountain Pipeline, wholly owned by the Canadian unit of Kinder Morgan, carries crude and refined oil from Alberta to the west coast of British Columbia.
The development of the Trans Mountain project will nearly triple the size of the existing pipeline. It will help Kinder Morgan carry 890,000 barrels a day of crude from Edmonton, Alberta, to Barnaby, British Columbia. Interestingly, the project has been approved by the Canadian government in spite of objection from aboriginal and environmental groups.
Kinder Morgan’s price chart, however, is unimpressive. Shares of the company have lost 9.8% in the last three months, while the Zacks Oil & Gas – Production and Pipeline industry registered an increase of 0.2%.
Kinder Morgan currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space include SunCoke Energy, Inc. SXC, Exterran Corp. EXTN and Canadian Natural Resources Limited Ltd. CNQ. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 120.0% in the preceding quarter. The company beat estimates in two of the four trailing quarters with average negative earnings surprise of 35.78%.
Exterran posted a positive earnings surprise of 123.21% in the year-ago quarter.
Canadian Natural Resources posted a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the four trailing quarters with average negative earnings surprise of 275.46%.
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