HOUSTON--(BUSINESS WIRE)--Kinder Morgan, Inc. (NYSE: KMI)
today announced it is expanding its growing fleet of Jones Act product
tankers and has signed a definitive agreement valued at an all-in price
of $568 million with Philly Tankers LLC to take assignment of contracts
for the construction of four, new 50,000-deadweight-ton, Tier II tankers
to be constructed at the Aker Philadelphia Shipyard in Philadelphia,
Pennsylvania. The transaction requires approval of shareholders holding
80 percent of the shares of Philly Tankers AS. Philly Tankers AS is the
parent of Philly Tankers LLC. Shareholders accounting for over 85
percent of Philly Tankers AS’ outstanding shares have already entered
into irrevocable voting undertakings approving the transaction. An
extraordinary general meeting of the shareholders of Philly Tankers AS
will be scheduled in August 2015 for formal shareholder approval of the
transaction.
Each LNG-conversion-ready tanker will have a capacity of 337,000
barrels. The vessels will be delivered to Kinder Morgan between November
2016 and November 2017 and placed in United States domestic service,
commonly referred to as the Jones Act trade. The first two that are
scheduled for delivery, in late 2016 and early 2017, are under long-term
contract to a creditworthy oil company. Contract discussions for the two
tankers to be delivered by late 2017 are ongoing with other creditworthy
counterparties, and executed contracts are expected to be completed by
early 2016. Approximately 10 percent of each vessel’s all-in price will
be paid upon construction start, with the pro-rata balance due upon each
ship’s delivery.
These four new vessels will increase Kinder Morgan’s Jones Act tanker
fleet to 16 ships by late 2017, of which 14 are under long-term
contracts with strong, creditworthy counterparties.
“There continues to be strong demand for domestic waterborne
transportation to move petroleum products and crude oil, and our fleet
of highly efficient tankers will provide stable, fee-based cash flow to
KMI shareholders for many years to come through multi-year contracts,”
said Kinder Morgan Terminals President John Schlosser. “This latest
transaction clearly underscores Kinder Morgan’s commitment to marine
transportation of crude oil, condensate and refined products in the U.S.
domestic trade.”
“This is just the latest indication that we continue to have good
opportunities to deploy capital in our core businesses at attractive
returns,” noted Steve Kean, president and chief executive officer of
Kinder Morgan, Inc. Prior to this transaction, the company identified a
backlog of projects that had grown to $22 billion. “We are seeing
numerous opportunities in our core pipelines and terminals businesses as
the demand for midstream transportation and storage services continues
to grow,” Kean said.
Kinder Morgan currently has seven product tankers on the water and five
tankers that are in various stages of design and construction at the
NASSCO shipyard in San Diego, California, scheduled for delivery between
late 2015 and mid-2017.
The new Tier II tankers obtained in this latest transaction will deliver
cargo flexibility, improved fuel efficiency and incorporate the latest
environmental protection features, including a Ballast Water Treatment
System.
Kinder Morgan entered the Jones Act product tanker business with an
initial purchase of five ships in January of 2014 via the acquisition of
American Petroleum Tankers and State Class Tankers for $960 million in
cash.
Kinder Morgan, Inc. (NYSE: KMI) is the largest energy infrastructure
company in North America. It owns an interest in or operates
84,000 miles of pipelines and 165 terminals. The company’s pipelines
transport natural gas, gasoline, crude oil, CO2 and other
products, and its terminals store petroleum products and chemicals, and
handle bulk materials like coal and petroleum coke. Kinder Morgan is the
largest midstream and third largest energy company in North America with
an enterprise value of approximately $115 billion. For more information
please visit www.kindermorgan.com.
This news release includes forward-looking statements. These
forward-looking statements are subject to risks and uncertainties and
are based on the beliefs and assumptions of management, based on
information currently available to them. Although Kinder Morgan
believes that these forward-looking statements are based on reasonable
assumptions, it can give no assurance that such assumptions will
materialize. Important factors that could cause actual results to
differ materially from those in the forward-looking statements herein
include those enumerated in Kinder Morgan’s reports filed with the
Securities and Exchange Commission. Forward-looking statements
speak only as of the date they were made, and except to the extent
required by law, Kinder Morgan undertakes no obligation to update or
review any forward-looking statement because of new information, future
events or other factors. Because of these uncertainties, readers
should not place undue reliance on these forward-looking statements.