ONEOK Buying Kinder Assets, Marketing
As part of a continued streamlining, Kinder Morgan Inc. unloaded
all of its Oklahoma, Kansas and West Texas gathering and processing
businesses last week to ONEOK Inc. In addition, ONEOK agreed to buy
Kinder's marketing and trading business as well as certain storage
and transmission pipelines in the Midcontinent.
ONEOK will pay Kinder about $114 million plus an amount equal to
net working capital at closing; assume the operating lease
associated with the Bushton, KS, gas processing plant; and assume
long-term capacity commitments on Natural Gas Pipeline Co. of
America and Kinder Morgan Interstate Gas Transmission (formerly KN
Interstate Gas Transmission Co.). ONEOK last week scheduled a
conference call to discuss the deal and then canceled it. Another
call was planned for today.
"This is a continuation of our strategy of expanding our
ownership of natural gas assets and marketing capabilities in the
Midcontinent region," said ONEOK President David Kyle. "This
acquisition represents in excess of 12,000 miles of pipeline, six
gas processing plants with capacity of 1.26 Bcf/d and 10.5 Bcf of
storage. When we combine these assets with our existing assets and
those to be added with the Dynegy transaction announced last week
we will be able to take advantage of operating synergies. We expect
this transaction to be accretive to earnings the first year even
without those synergies."
The transaction includes three storage fields in the Texas
Panhandle. A spokesman could not immediately say how much long term
capacity ONEOK acquired on Kinder Morgan's two main pipelines, but
the purchase of the marketing and trading operation presumably
would have included the capacity held by former NGPL affiliate
ONEOK recently said it would buy Dynegy Midcontinent gathering
and processing assets for $307.7 million (see NGI, Feb. 7).
"Last fall, we announced our intention to exit these businesses
as part of our 'back to basics' strategy," said Kinder CEO Rich
Kinder. "With this sale, KMI's divestiture program is more than 80%
complete. The sales proceeds are consistent with the estimates we
made in the fourth quarter as part of the write-down of
discontinued operations. The combination of cash, assumption of the
Bushton lease and long-term capacity agreements will further
strengthen our balance sheet and other credit characteristics.
Going forward, we will focus on growing our core, fee-based
Late last year it was announced HS Resources would buy Kinder's
gathering system in the Wattenberg field area of the
Denver-Julesberg Basin, along with its interests in the Amoco-BP
Wattenberg Gas Processing Plant and KN Wattenberg LLC, which owns
the Wattenberg transmission system, in a phased transaction. This
also was characterized as part of Kinder's divestiture plan (see
NGI, Dec. 6).
Joe Fisher, Houston
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