Kinder Morgan Energy Partners (KMP), a pipeline transportation and energy storage company, has entered into a purchase and sale agreement with oil company Tallgrass Energy Partners in order to obtain regulatory approval of its acquisition of El Paso.
Chairman and CEO Richard Kinder says: ‘As I previously stated, we would prefer to keep all of these assets, but we anticipated divestiture of certain assets in the Rockies would be necessary to obtain FTC (Federal Trade Commission) approval.’
As part of the agreement, Tallgrass will purchase Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Company, the Casper Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and the company’s 50% interest in the Rockies Express Pipeline for $1.8 billion (€1.4 billion) in cash.
The agreement, which is expected to close by the end of this year subject to Federal Trade Commission approval, also includes the proportionate amount of Rockies Express Pipeline debt, which is equivalent to a value of $3.3 billion.
Kinder Morgan announced earlier this year that it had reached an agreement with the Federal Trade Commission to divest its assets in the Rockies in order to obtain regulatory approval of its acquisition of El Paso, which closed in May.
Barclays and Citi acted as financial advisors to Kinder Morgan on this transaction.
Tallgrass Energy Partners CEO David Dehaemers Jr. says: ‘Tallgrass Energy Partners is excited about the opportunity to acquire these premier midstream assets. We look forward to working with a talented group of Kinder Morgan employees and will leverage their integral experience as we continue the high level of operational performance of these assets, work to expand the asset base and grow the company.’
‘The conversion of the Pony Express Pipeline portion of KMIGT into oil service, the seamless transitioning of its gas customers, and placing it in service during the second half of 2014 will be a significant focus for the near-term growth. In addition, we will be exploring some promising growth projects on the east end of Rockies Express to maximise the potential of this state-of-the-art pipeline,’ he adds.