El Paso Energy Partners agrees to acquire midstream assets for $750 million

El Paso Energy Partners LP, which is 28% owned by El Paso Corp. (EPC), signed a letter of intent to acquire certain Texas midstream assets from EPC for $750 million. Subject to regulatory approvals, the transaction is expected to close in the first quarter. The assets to be acquired include the EPGT Texas intrastate pipeline, gathering systems in the Permian basin, and an interest in the Indian Basin gas plant in southeastern New Mexico.

Feb. 19, 2002

2 min read

By the OGJ Online Staff
HOUSTON, Feb. 19 -- El Paso Energy Partners LP, which is 28% owned by El Paso Corp. (EPC), announced that it signed a letter of intent to acquire certain Texas midstream assets from EPC for $750 million.

The assets to be acquired include the 9,400 mile, 5 bcfd capacity EPGT Texas intrastate pipeline. EPGT deliveries averaged 3.5 bcfd during 2001.

El Paso Energy also will acquire the 1,300 mile Permian basin gathering systems, with a capacity of 465 MMfcd and average net 2001 throughput of 341 bcfd. Assets include a 42.3% nonoperated interest in the Indian Basin gas processing and treating plant in Eddy County, NM, and associated gathering lines.

Terms call for El Paso Energy to pay $560 million in cash and $190 million in kind, which consists of the Prince tension leg platform (TLP) and related field royalty interest. The transaction will be financed through debt and equity financing, the company said. Subject to regulatory approvals, the transaction is expected to close in the first quarter.

As part of the transaction, El Paso Energy will transfer its Prince TLP and 9% overriding royalty interest in Prince field to EPC unit El Paso Production Co.. El Paso Energy will retain third-party marketing rights for the remaining platform capacity and an option to repurchase the platform at the end of the field's life.

El Paso Energy CEO Robert Phillips said his company has acquired more than $1.5 billion of midstream assets, including this transaction, from El Paso since it became the general partner in 1998. The latest announcement marks El Paso Energy's largest transaction so far.

"Going forward, we expect to continue developing greenfield transportation infrastructure and platform projects in the Gulf of Mexico, like the recently announced Cameron Highway oil pipeline," Phillips said (OGJ Online, Feb. 13, 2002). Cameron Highway is a proposed $450 million, 380 mile pipeline to deliver deepwater crude oil from an offshore hub to Port Arthur and Texas City, Tex.