Wednesday, May 2, 2012

Kinder Morgan buying 50 percent interest in natural gas venture for $300 million

HOUSTON, Texas - Kinder Morgan Energy Partners, L.P. (KMP), on April 25 announced a definitive agreement with an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. L.P., whereby KMP will purchase from KKR its 50 percent interest in the joint venture that owns the Altamont gathering, processing and treating assets (Uinta Basin in Utah) and the Camino Real Gathering System (Eagle Ford Shale in Texas) for $300 million in KMP common units.

El Paso Corp. (EP) owns the other 50 percent of the joint venture.

KMP anticipates the transaction will close subsequent to the completion of Kinder Morgan, Inc.'s (KMI) acquisition of El Paso, which is expected to occur by the end of May.

"We are pleased to reach this agreement with KKR which, upon closure of both transactions noted above, will increase Kinder Morgan's ownership in this joint venture to 100 percent - 50 percent at KMP and 50 percent at KMI," said Duane Kokinda, president of Kinder Morgan's intrastate pipelines.

Upon closing, the transaction is expected to be immediately accretive to cash distributable to KMP unitholders.

Marc Lipschultz, KKR's global head of energy and infrastructure, commented, "Since forming our joint venture over a year ago, it has been a pleasure partnering with the El Paso team on building out an exciting midstream business."

With over 1,100 miles of pipeline infrastructure, the Altamont system includes over 450 well connections with producers, and it operates a processing plant with the design capacity of 60 million cubic feet per day (MMcf/d) and a 5,600 barrel per day (b/d) natural gas liquids fractionator. The Camino Real Gathering System has 150 MMcf/d of gas gathering capacity and 110,000 b/d of oil gathering capacity.

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