Press Esc to close

WorldOil

World Oil News Center



KMP to acquire Copano for $5 billion

HOUSTON -- Kinder Morgan Energy Partners and Copano Energy announced a definitive agreement whereby KMP will acquire all of Copano' s outstanding units for a total purchase price of approximately $5 billion, including the assumption of debt. The transaction, which has been approved by the boards of directors of both companies, will be a 100 percent unit for unit transaction with an exchange ratio of .4563 KMP units per Copano unit.

The consideration to be received by Copano unitholders is valued at $40.91 per Copano common unit based on KMP' s closing price as of Jan. 29, 2013, representing a 23.5 percent premium to Copano' s close on Jan. 29, 2013. The transaction, which is expected to close in the third quarter of 2013, is subject to customary closing conditions, including regulatory approval and a vote of the Copano unitholders. TPG, Copano' s largest unitholder (owning over 14 percent of its outstanding equity), has agreed to support the transaction.

Copano, a midstream natural gas company with operations primarily in Texas, Oklahoma and Wyoming, provides comprehensive services to natural gas producers, including natural gas gathering, processing, treating and natural gas liquids fractionation. Copano owns an interest in or operates about 6,900 miles of pipelines with 2.7 Bcfd of natural gas throughput capacity and 9 processing plants with more than 1 Bcfd of processing capacity and 315 MMcfd of treating capacity.

The acquisition of Copano is expected to be accretive to cash available for distribution to KMP unitholders upon closing. The general partner of KMP, Kinder Morgan, has agreed to forego a portion of its incremental incentive distributions in 2013 in an amount dependent on the time of closing. Additionally, KMI intends to forgo $120 million in 2014, $120 million in 2015, $110 million in 2016 and annual amounts thereafter decreasing by $5 million per year from this level. The transaction is expected to be modestly accretive to KMP in 2013, given the partial year, and about $0.10 per unit accretive for at least the next five years beginning in 2014.

"Copano' s cash flow is largely and increasingly fee based, and our accretion projections are based on commodity prices consistent with the current forward curve for the portion that is sensitive to commodity prices," Kinder explained.

The acquisition will be immediately accretive to KMI' s cash available to pay dividends, even after KMI foregoes a portion of the incremental incentive distributions this transaction is expected to produce. The increase in KMI' s cash available to pay dividends (net of the amounts voluntarily foregone) is expected to be approximately $25 million in 2014 growing to approximately $70 million in 2016.

"We anticipate retaining the vast majority of Copano' s approximately 415 employees," Kinder said. "This transaction is about producing future cash flow and expanding our midstream services footprint."

Copano is headquartered in Houston, Texas, and has a sizable office in Tulsa, Okla., which KMP intends to maintain.

Upon closing, KMP will own 100 percent of Eagle Ford Gathering (currently a joint venture with Copano), which provides gathering, transportation and processing services to natural gas producers in the Eagle Ford shale. Eagle Ford Gathering comprises approximately 400 mi of pipelines (including its capacity rights in certain KMP pipelines) with capacity to gather and process over 700,000 MMBtu/day.

01/30/2013

 

Bookmark and Share


WO DATA HUB

EngineeringTablesIcon-Large

Engineering Data Tables

World Oil's specialized upstream Engineering Data Tables featuring the Drill Bit Classifier, Tubing Tables and more. Get Total Access today.

WO SUPPLEMENTS

2013 Fracturing Technology

2013 Fracturing Technology

MEDIA CENTER

By Digital Publisher

Drill Bit Classifier World Oil published its renowned Drill Bit Classifier in September 2013. The Drill Bit Classifier is a comprehensive listing of major manufacturers' d...

ENERGY EVENTS