Kinder Morgan to purchase El Paso in $ 38 bn deal

Kinder Morgan has entered into a definitive agreement to purchase all outstanding shares of El Paso in a deal valued at approximately $ 38 bn including the assumption of debt outstanding at El Paso Corporation and El Paso Pipeline Partners.
"This once in a lifetime transaction is a win-win opportunity for both companies," said Kinder Morgan Chairman and CEO Richard D. Kinder.

"The El Paso assets are primarily regulated interstate natural gas pipelines that produce substantial, stable cash flow and have access to key supply regions and major consuming markets. The natural gas pipeline systems of the two companies are very complementary, as they primarily serve different supply sources and markets in the United States.”
“The transaction is expected to produce immediate shareholder value (upon closing) through strong cash flow accretion and offers significant future growth opportunities."

In the announcement, Kinder Morgan outlined that the transaction, which has been approved by each of the company’s board of directors, will result in the creation of the largest midstream and forth largest energy company in North America.
Following close of the transaction the combined enterprise will be the:

• Largest owner and operator of natural gas pipelines and storage assets in North America with approximately 67,000 miles of natural gas transportation pipelines. Pipelines are connected to many important natural gas shale plays including Eagle Ford, Marcellus, Utica, Haynesville, Fayetteville and Barnett. Largest provider of contracted natural gas treating services and significant other midstream gathering assets.
• Largest independent transporter of petroleum products in the United States, transporting approximately 1.9 mm bpd of gasoline, jet fuel, diesel, natural gas liquids and crude oil through more than 8,000 miles of pipelines.
• Largest transporter of CO2 in the United States, transporting 1.3 bn cfpd. Carbon dioxide is used in enhanced oil recovery projects.
• Second largest oil producer in Texas, producing over 50,000 bpd.
• Largest independent terminal owner/operator in the United States. Liquids terminals have capacity of 107 mm barrels and store refined petroleum products, ethanol and more. Dry bulk terminals are expected to handle over 100 mm tons of materials in 2011, including products like coal.
• Only oilsands pipeline serving the West Coast. The Trans Mountain pipeline system transports 300,000 barrels of crude oil per day to Vancouver, BC, and Washington state.

The transaction is subject to standard regulatory approvals and is expected to close in the second quarter of 2012.