Kerr-McGee Corp. and El Paso Corp. on Monday announced they have agreed to sell to Denver-based MarkWest Energy Partners LP their working interests in the Javelina gas processing and fractionation facility in Corpus Christi, TX, each for an estimated $142 million.
At closing, the Oklahoma City, OK-based Kerr-McGee said it expects to receive net after-tax cash proceeds of approximately $100 million and plans to use the proceeds to reduce its debt. El Paso said it also expects to report a pre-tax gain of about $100 million on the sale, which is due to close during the fourth quarter of this year. The planned interest sales are subject to approval under the Hart-Scott-Rodino Act and other customer closing conditions.
The Javelina gas processing facility has been owned in partnership by Kerr-McGee (40% working interest), El Paso Corp. (40% working interest and operator) and Valero Energy Corp. (20% working interest) through Javelina Co. and Javelina Pipeline Co.
"This transaction is another step in our strategic plan to divest of noncore assets and focus on our exploration and production business," said Kerr-McGee CEO Luke R. Corbett.
With the recently announced sale of El Paso's South Louisiana processing plants, which is expected to close shortly, this transaction will conclude the sale of El Paso's midstream assets, the company said. It noted that the sale of El Paso's interest in the Javelina gas processing and factionation facility will reduce El Paso's debt, net of cash, to approximately $15 billion by year-end 2005.
The gas processing facility gathers, treats and processes off-gas streams from six adjacent refineries. The fractionation facility separates the liquids from the gas processing plant and produces ethylene, propylene, hydrogen and natural gas liquids.
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