El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
El Paso Energy Partners to Acquire Midstream Assets for $750 Million and Raise Annual Distribution $0.10 to $2.60 Per Common UnitHOUSTON, Feb 19, 2002 /PRNewswire-FirstCall via COMTEX/ -- El Paso Energy
Partners, L.P. (NYSE: EPN) announced today that its Board of Directors and Audit
and Conflicts Committee have approved the proposed acquisition of certain Texas
midstream assets from El Paso Corporation (NYSE: EP). EPN and El Paso
Corporation have entered into a Letter of Intent covering the proposed
transaction subject to the satisfaction of customary conditions to closing,
including negotiating and executing definitive agreements, obtaining Hart Scott
Rodino and other third-party approvals and consents, and obtaining satisfactory
results from ongoing due diligence. The transaction is expected to close in the
first quarter of 2002.
Primary assets included in the transaction are a total of 10,677 miles of
natural gas transportation assets including the EPGT Texas intrastate pipeline,
gathering systems in the Permian Basin, and an interest in the Indian Basin gas
plant located in southeast New Mexico. Total consideration for these
transactions is $750 million-approximately eight times expected cash flow as
measured by earnings before interest, taxes, depreciation, and amortization
(EBITDA). For the assets, EPN will pay to El Paso Corporation approximately $560
million in cash and $190 million in kind, consisting of the Prince Tension Leg
Platform (TLP) and related field royalty interest.
Subject to the closing of the transaction, the Board of Directors of El Paso
Energy Partners has authorized a $0.10 per unit distribution increase, which
will raise the annual distribution to $2.60 per common unit ($0.65 per quarter).
"With the closing of this transaction, we will have increased our cash
distribution four times, an increase of 13 percent, in the past year," said
Robert G. Phillips, chief executive officer of El Paso Energy Partners. "These
increases are due to the more than $1.5 billion of midstream asset acquisitions,
including this transaction, made from El Paso Corporation since it became the
general partner in 1998, as well as growing contributions from our Gulf of
Mexico assets. The assets to be acquired have historically generated
consistently stable cash flow and will further diversify EPN's operations, which
include oil and natural gas pipelines; natural gas storage; natural gas liquids
fractionation, pipelines and storage; and offshore platform services. This
transaction, our largest and most important to date, will significantly enhance
the partnership's onshore asset base and is just another step in implementing
EPN's proven midstream growth strategy. 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. We
will also continue to complete acquisitions that are immediately accretive to
cash flow to provide our unitholders with consistent distribution increases. We
think this transaction solidly accomplishes these goals.
"We expect to finance the transaction through permanent debt and equity
financing in accordance with our strategy to maintain a strong balance sheet.
Longer-term, our objective is to reduce EPN's overall debt-to-total capital
ratio to the 50-percent level," concluded Phillips.
The assets to be acquired include the 9,400-mile EPGT Texas intrastate pipeline,
which has an operating capacity of nearly 5 billion cubic feet of natural gas
per day (Bcf/d). EPGT deliveries averaged 3,500 thousand dekatherms per day
(Mdth/d) during 2001. EPN also will acquire the 1,300-mile Permian Basin
gathering systems with a capacity of 465 million cubic feet per day and average
net 2001 throughput of 341 Mdth/d, and a 42.3-percent non- operated interest in
the Indian Basin gas processing and treating plant and associated gathering
As part of the transaction, EPN will transfer its Prince TLP and 9-percent
overriding royalty interest in the Prince Field to El Paso Production Company, a
business unit of El Paso Corporation and the field operator. EPN will retain
third-party marketing rights for remaining platform capacity and an option to
repurchase the platform at the end of the Prince Field reserve life.
El Paso Energy Partners, L.P. is one of the largest publicly traded master
limited partnerships with interests in a diversified set of midstream assets,
including onshore and offshore natural gas and oil pipelines; offshore
production platforms; natural gas storage and processing facilities, and natural
gas liquids fractionation, transportation, storage and terminal assets.
Visit El Paso Energy Partners on the Web at www.elpasopartners.com .
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements and projections, made in
reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The partnership has made every reasonable effort to ensure
that the information and assumptions on which these statements and projections
are based are current, reasonable, and complete. However, a variety of factors
could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release. While the
partnership makes these statements and projections in good faith, neither the
partnership nor its management can guarantee that the anticipated future results
will be achieved. Reference should be made to the partnership's (and its
affiliates') Securities and Exchange Commission filings for additional important
factors that may affect actual results.
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SOURCE El Paso Energy Partners, L.P.
CONTACT: Communications & Government Affairs, Norma F. Dunn, Senior Vice
President, +1-713-420-3750, or fax, +1-713-420-3632, or Investor Relations,
Sandra M. Ryan, Director, +1-832-676-5371, or fax, +1-832-676-1195, both of El
Paso Energy Partners, L.P.
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