KINDER MORGAN AGREES TO BUY SANTA FE PACIFIC PIPELINE FOR $1.16 BILLION

HOUSTON, Tex. -- Kinder Morgan Energy Partners L.P, founded in January of this year by Cape Girardeau native Richard Kinder, has agreed to acquire the much larger Santa Fe Pacific Pipeline Partners L.P., for about $1.6 billion in equity and cash.

The acquisition will give Kinder Morgan pipeline access to key western U.S. markets.

Kinder Morgan was created when Kinder, formerly president of Enron Corp., and his partners, purchased Enron Liquids Pipeline, L.P.

Kinder, chairman and chief executive officer of Kinder Morgan, said he expects $15-to-$20 million in cost savings after the purchase, by eliminating many overlapping functions

The acquisition will give Kinder Morgan, which currently owns 2,100 miles of pipelines, an addition 3,300 miles of pipeline in several Western states.

Santa Fe Pacific's system transports one million barrels day of petroleum products, including gasoline and jet fuel, and serves markets in California, Arizona and other states.

Under terms of the deal, Kinder Morgan, headquartered in Houston, will issue to Santa Fe Pacific shareholders 1.39 partnership units for each unit of the Orange, Calif.-based Santa Fe Pacific.

Kinder Morgan will also pay $85 million in cash for the one percent interest in Santa Fe Pacific, of its general partner, a unit of railroad giant Burlington Northern Santa Fe Corp.

Wednesday's stock report reading for Kinder Morgan was $39.75, and Santa Fe Pipeline was $40.75 on the big board.

Kinder said the purchase will add to earnings from the beginning and that the company expected to increase in per-unit annual distribution to $2.25, from $2 after the deal closes.

Kinder joined Enron Corp., a Texas-based gas company, in 1980. He served in a number of management positions and was named president and chief operations office of the company in 1990.

Earlier he had served as chairman and chief executive officer of Enron's gas pipeline and marketing group.

Kinder is a graduate of the University of Missouri Law School where he served as president of Missouri's Law School Board of Governors.