KN Energy to buy Oxy's MidCon unit

Dec. 29, 1997
KN Energy Inc., Lakewood, Colo., has agreed to acquire Occidental Petroleum Corp.'s MidCon Corp. natural gas transmission and marketing subsidiary for $3.49 billion cash. KN also will assume about $500 million in liabilities, making the transaction worth almost $4 billion. Occidental says that, after taxes and other expenses, the deal will net it about $3.1 billion. And KN will pay Oxy an average $30 million/year for 29 years to lease MidCon's Texas pipeline.

KN Energy Inc., Lakewood, Colo., has agreed to acquire Occidental Petroleum Corp.'s MidCon Corp. natural gas transmission and marketing subsidiary for $3.49 billion cash. KN also will assume about $500 million in liabilities, making the transaction worth almost $4 billion.

Occidental says that, after taxes and other expenses, the deal will net it about $3.1 billion. And KN will pay Oxy an average $30 million/year for 29 years to lease MidCon's Texas pipeline.

KN Energy will finance the transaction using a bank acquisition facility, which it expects to refinance by issuing debt and equity securities. KN expects the deal to accrue to its earnings per share and cash flow next year.

The deal

The transaction will expand KN Energy's pipeline system to more than 26,000 miles of lines in 15 states. Its expanded system will ship gas from four of the U.S.'s five major gas supply basins, including the Midcontinent, West Texas, Rocky Mountain, and Gulf Coast regions.

The transaction has been approved by the boards of KN Energy and Occidental. After the transaction closes, KN Energy will market more than 4 bcfd of natural gas and own more than 12,000 miles of gathering and processing pipelines, 8,400 miles of distribution pipeline, and 233 bcf of storage capacity.

The acquisition will bring together KN-PacifiCorp en·able joint venture and MidCon's mc2 Inc.-companies that KN says "are leading the charge for deregulation of national energy markets."

Both companies will focus on residental and small-business customers in mass markets.

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