Enterprise buying gas gathering lines from M2 for $1.2 billion

Enterprise Products Partners L.P. said on April 1 that it has agreed to purchase two natural gas gathering and treating systems from M2 Midstream for about $1.2 billion.
The transaction for the State Line system and the Fairplay system is expected to close in early May 2010 and be accretive to Enterprise's distributable cash flow in the second half of 2010.
The systems are located in Northwest Louisiana and East Texas, and gather natural gas produced from the Haynesville/Bossier Shales and the Cotton Valley and Taylor Sands formations. The company noted that both systems are supported by long-term acreage dedications and volumetric commitments from producers.
In late February, Enterprise Products announced the completion of its $3.3 billion merger with TEPPCO partners, L.P., an energy logistics partnership. With an enterprise value of about $30 billion, 48,000 miles of pipelines and market capitalization of $18 billion, the combined entity has become the nation's largest publicly traded partnership.
According to Enterprise, the two natural gas systems that it has agreed to acquire complement its downstream assets and provide multiple opportunities for synergies, including a long-term gathering conduit for the company's Haynesville Extension pipeline and Enterprise Texas pipeline, as well as natural gas liquid or NGL volumes for the company's Panola pipeline and downstream Mont Belviue fractionation, storage and distribution complex.
The State Line system, which began operations in February 2009, is located in Desoto and Caddo Parishes, La., and Panola County, Texas. The system includes 138 miles of natural gas pipelines with a capacity of approximately 400 million cubic feet per day or Mmcfd, and two treating facilities. The system, currently gathering about 260 Mmcfd, will almost triple its capacity to 700 MMcfd after a 50-mile expansion of the system that is expected to be completed in June 2010.
The State Line system will interconnect with the 42-inch Haynesville Extension of Enterprise's Acadian natural gas pipeline system. The Haynesville Extension, currently under construction, is expected to be completed in the third quarter of 2011. Enterprise noted that the State Line system, once connected to the Haynesville Extension, can be further expanded to 1.2 billion cubic feet per day for a nominal cost.
In late 2008, M2 Midstream initiated the State Line Gathering System, a greenfield project, to serve the Haynesville Shale play in DeSoto Parish, La. During 2009, the company added over 90 miles of pipeline to the system and three processing plants.
The Fairplay system, located in Rusk, Panola, Gregg and Nacogdoches counties in Texas, includes 249 miles of natural gas pipelines. This includes about 62 miles leased from third parties, with a capacity of approximately 285 MMcfd, and is currently gathering approximately 180 MMcfd. This system is expected to be connected to the Enterprise Texas Pipeline system by the first quarter of 2011.
The Fairplay system was acquired by M2 Midstream in December 2007 and began a significant capital improvement and expansion during 2008.

Enterprise and TEPPCO complete merger, announce changes

HOUSTON - Enterprise Products Partners L.P. and TEPPCO Partners, L.P. on Oct. 26 announced that the merger of the two partnerships has been completed. The merger agreement was approved by TEPPCO unitholders at a special meeting held Oct. 23 in Houston.
With an enterprise value of approximately $30 billion, 48,000 miles of pipelines and market capitalization of $18 billion, Enterprise is now the nation`s largest publicly traded partnership.
Some 97 percent of the TEPPCO units that voted were cast in favor of the merger and represented about 71 percent of TEPPCO`s total outstanding units. In addition, approximately 96 percent of the votes cast by Unaffiliated TEPPCO Unitholders approved the merger of the two partnerships.
Under the terms of the merger agreement, TEPPCO unitholders will receive 1.24 Enterprise common units for each TEPPCO unit owned at the effective time of the merger, which is expected to be completed Oct. 26, 2009.
As previously announced, Enterprise is offering to exchange TEPPCO senior and subordinated notes validly tendered for exchange, and not validly withdrawn, prior to their expiration date, for Enterprise notes. The exchange is scheduled to be completed at the close of business on Oct. 27. As of Oct. 23, $1.94 billion of the $2 billion aggregate principal amount of TEPPCO notes had been tendered for exchange.

TEPPCO stock up after it rejects buyout offer from Enterprise Partners LP

TEPPCO Partners LP shares closed up 6.3 percent on April 29 at $27.74 after the company’s board rejected a $2.3 billion buyout offer from Enterprise Partners LP. However, TEPPCO said it would consider another offer "that appropriately recognizes the value" of the company.
TEPPCO – the initials originally stood for Texas Eastern Products Pipeline Co. - formed a special committee to review the offer after it was initially submitted last month.
In order to evaluate the offer by Enterprise, the Audit, Conflicts and Governance Committee of TEPPCO's general partner, Texas Eastern Products Pipeline Company, LLC, formed a special committee of independent directors consisting of Donald H. Daigle, Irvin Toole, Jr. and Duke R. Ligon. After considering Enterprise's offer, the special committee unanimously concluded that it did not support the offer as it now stands and had advised Enterprise of its decision. The Houston-based owner of 36,000 miles of onshore and offshore pipelines said the deal values TEPPCO at $21.89 per unit, a premium of 4.8 percent, based on the 10-day average closing prices of TEPPCO units and Enterprise common units on March 6, the business day prior to the date on which Enterprise initially made the proposal to TEPPCO, shares of which closed at $26.15 on April 28.
Texas Eastern Products Pipeline Co. LLC, general partner of TEPPCO Partners LP, is owned by Enterprise GP Holdings.