One of the largest expected initial public offerings in the oil patch is now likely to be seen.  We have been expecting this as a contingent IPO for some time and it appears to be on the calendar now.  Kinder Morgan, Inc. has just announced that parent company Kinder Morgan Holdco LLC, has filed to come  public with an S-1 filing for an initial public offering.  The ticker will return to “KMI” on the New York Stock Exchange and the filing is for ‘up to $1.5 billion in common stock.

If this all sounds familiar, it should.  Kinder Morgan was taken private back in 2006 in a management-led buyout with Chairman & CEO Richard Kinder, and investors Goldman Sachs, Highstar, Carlyle, and Riverstone.  Before (and after) the effects of the offering, Richard Kinder owns 30.6% of the interest.  There are currently two public Kinder Morgan entities.  Kinder Morgan Energy Partners LP (NYSE: KMP) is down 0.6% at $69.92 and Kinder Morgan Management LLC (NYSE: KMR) is down 0.8% at $63.43.

Goldman, Sachs & Co. and Barclays Capital are acting as joint book-running managers for the proposed offering.  No deal terms have been formally stated and that $1.5 billion is for filing purposes and could easily be changed  between now and the formal IPO date.

The company notes:   We own the general partner and approximately 11.0% of the limited partner interests of Kinder Morgan Energy Partners, L.P., referred to in this prospectus as the “Partnership” or “KMP.” The Partnership is a publicly traded pipeline limited partnership whose limited partner units are traded on the New York Stock Exchange under the ticker symbol “KMP.” Additionally, the shares of our subsidiary that manages the Partnership, Kinder Morgan Management, LLC, referred to in this prospectus as “Kinder Morgan Management” or “KMR,” are traded on the New York Stock Exchange under the ticker symbol “KMR.”

Here is perhaps the single biggest issue to consider for new buyers… Kinder Morgan itself will not receive any proceeds from the offering.  Included in those existing shareholders are affiliates of Goldman Sachs, Highstar Capital LP, The Carlyle Group, and Riverstone Holdings LLC.

Kinder Morgan Holdco LLC is planning to convert from an LLC to a Delaware corporation, and the entity will be renamed Kinder Morgan, Inc.  The partnership and interests show the following:

• the general partner interest, which entitles it to receive incentive distributions;
• 21.7 million of the 222.4 million outstanding KMP units, representing a 6.9% limited partner interest;
• 12.9 million of the Partnership’s 90.3 million outstanding i-units, representing a 4.1% limited partner interest, through its ownership of 12.9 million KMR shares (i-units are a class of the partnership’s limited partner interests that receive distributions in the form of additional i-units instead of cash;
• it also owns a 20% equity interest in NGPL PipeCo LLC, the owner of Natural Gas Pipeline Company of America and certain affiliates, collectively referred to in this prospectus as “NGPL.” NGPL is a major interstate natural gas pipeline and storage system that it operates.

In 2009 and 2010, it distributed an aggregate of $650 million and $700 million, respectively, to its current investors.   KMP’s partnership agreement requires KMP to distribute all available cash after the end of each calendar quarter.  Business operations are numerous in the initial prospectus filing with the SEC.  Some are as follows: