Kinder Morgan Energy Partners, L.P., announced it has signed a definitive agreement with an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. L.P., (together with its affiliates, KKR) 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 Corporation owns the other 50 percent of the joint venture. KMP anticipates this transaction will close subsequent to the completion of Kinder Morgan, Inc.’s 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. Today’s transaction with Kinder Morgan reflects the strategic investments made by the partnership in both the Altamont and the Camino Real systems, with both of these assets benefiting from attractive long-term fundamentals. We are pleased to transfer our 50 percent interest in the partnership to Kinder Morgan, a world class midstream operator that will continue to invest in these important assets.”
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 (Bpd) natural gas liquids fractionator. The Camino Real Gathering System has 150 MMcf/d of gas gathering capacity and 110,000 Bpd of oil gathering capacity.
Kinder Morgan Energy Partners, L.P. is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates approximately 29,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP and Kinder Morgan Management, LLC (NYSE: KMR) have an enterprise value of over $40 billion. The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI). Combined, KMI, KMP and KMR constitute the largest midstream energy entity in the United States with an enterprise value of over $65 billion.