Sempra Energy subsidiary Sempra US Gas & Power has signed an agreement to divest its 25% stake in the Rockies Express Pipeline (REX) to a subsidiary of Tallgrass Development for approximately $440m.

The 1,712-mile Rockies Express natural gas transmission pipeline, which is operated by Tallgrass Development, runs from Opal, Wyoming, and Meeker, Colorado, to Clarington, Ohio, US.

The project is owned by consortium comprising a subsidiary of Tallgrass Development with 50% stake, Sempra US Gas & Power with 25% stake and a subsidiary of Phillips 66 with 25% interest.

Sempra US Gas & Power CEO and president said: "After careful evaluation of our natural gas portfolio, we determined that our minority stake in REX is not consistent with our long-term growth strategy.

"While REX is an important part of the country’s natural gas pipeline system, we believe that given the changing market conditions, we can more productively redeploy the proceeds from the REX sale into long-term growth opportunities that better meet our strategy and risk profile."

Sempra Energy plans to use the sale proceeds to mitigate the loss of REX earnings in the near term while increasing long-term earnings profile.

Sempra Energy CFO and executive vice-president Joseph Householder said: "While Sempra Energy’s earnings from REX for March through December 2016 will be reduced by approximately $60 million, forecasted earnings from REX were expected to be immaterial to Sempra Energy beginning in 2020."

Subject to customary closing conditions and a right of first refusal, the transaction is expected to close in the second quarter.