Kinder Morgan Energy Partners, L.P. (NYSE: KMP), signed a definitive agreement with an investment vehicle affiliated with Kohlberg Kravis Roberts & Co. L.P., (KKR) whereby KMP will purchase from KKR its 50% interest in the joint venture that owns the Altamont gathering, processing and treating assets in the Uinta Basin in Utah and the Camino Real Gathering System in the Eagle Ford shale for $300 million in KMP common units. El Paso Corp. (NYSE: EP) owns the other 50% of the joint venture. KMP anticipates this transaction will close subsequent to the completion of Kinder Morgan, Inc.’s (NYSE: KMI) 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% —50% at KMP and 50% at KMI,” Duane Kokinda, president of Kinder Morgan’s intrastate pipelines, said in a news release. 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 in the release, “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% 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.
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