El Paso Acquires San Juan Basin Assets

El Paso Energy has completed its acquisition of the San Juan assets from El Paso Corporation. EPN paid $782 million for the assets, which include the natural gas gathering, processing and treating assets located in the San Juan Basin of New Mexico, natural gas liquids (NGL) transportation and fractionation assets located in south Texas, and the Typhoon oil and natural gas pipelines located in the Deepwater Trend of the Gulf of Mexico. The purchase price was funded by the issuance of 10.9 million Series C equity units to El Paso Corporation, the private placement of $200 million of 10.63 percent senior subordinated notes due 2012 representing $195 million in net proceeds, and $238 million under a new senior secured credit facility that matures in May 2004.

"We are thrilled to close this acquisition and add these valuable businesses to the partnership's stable of diversified, long lived, solid cash flow generating assets," said Robert G. Phillips, chairman and chief executive officer of El Paso Energy Partners. "This asset package, anchored by the 5,300 mile San Juan Basin gathering system, continues to further diversify our cash flow mix and adds another major midstream asset to the partnership. Additionally, the Typhoon system integrates well with our Marco Polo project, and the natural gas liquids assets in southeastern Texas will complement our existing Texas NGL and fractionation business. We expect these assets to contribute between $115 million and $125 million of cash flow to our full year 2003 results or approximately $0.20 per unit of distributable cash flow. We are also pleased that we were able to put together a comprehensive financing package which immediately enhances our balance sheet by decreasing our pro forma September 2002 debt to total capital ratio to 65 percent from 69 percent. This transaction culminates the most significant year of growth in the partnership's history with approximately $1.5 billion in acquisitions and announced deepwater growth projects totaling gross capital expenditures of approximately $800 million. We expect the acquisitions and deepwater projects to generate substantial growth for the partnership in 2003 and beyond."


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