Kinder Morgan Energy Partners LP (KMP) has agreed to acquire the natural gas treating business of Crosstex Energy LP and Crosstex Energy Inc. for approximately $266 million, including working capital. The deal will make KMP the largest provider of contract-provided treating plants in the United States, it said. Sale proceeds will contribute to debt reduction at Crosstex.

Houston-based KMP is buying approximately 290 amine-treating and dew point control plants predominantly located in Texas and Louisiana, with additional facilities in Mississippi, Oklahoma, Arkansas and Kansas. "These fee-based, nonregulated assets produce stable cash flow, and the acquisition is expected to be accretive to cash distributable to unitholders upon closing (expected in the fourth quarter of this year). We look forward to offering natural gas treating services to our Texas intrastate customers and to other producers in various supply basins, including the rapidly developing shale plays," said KMP CEO Richard D. Kinder.

The Crosstex Energy companies, which are based in Dallas, said sale proceeds will be used to pay down approximately $260 million of Crosstex Energy LP outstanding debt. Combined with proceeds from the recent sale of the partnership's Mississippi, Alabama and South Texas assets to Southcross Energy LLC (see NGI, June 15), the funds fully satisfy the $300 million target for debt reduction established in amendments to the partnership's debt facilities, the company said.

The deal with KMP is expected to close in the fourth quarter and is contingent on the approval of the lenders under the partnership's revolving credit and senior note agreements and certain other conditions.

"We've taken another step forward in executing our plan to reduce our debt and improve our leverage position. This sale, the recent sale of our Mississippi, Alabama and South Texas assets, and additional asset sales earlier this year have allowed us to reduce our outstanding debt by more than $550 million," said Crosstex CEO Barry E. Davis. "We have significantly improved the outlook for our business and 2009 results through margin enhancements, cost reductions and operating efficiencies, and we will continue to employ these tactics to enhance our bottom line.

"We have continued to make solid investments in our assets in North Texas and Louisiana and have taken advantage of numerous high-return growth opportunities. An example is the 100 MMcf/d pipeline expansion we recently completed in Louisiana that services our producer customers operating in the Haynesville Shale. We are pursuing additional projects that we believe will increase our takeaway capacity from the Haynesville Shale to approximately 500 MMcf/d by the second quarter of 2010. We are well positioned to capitalize on our strategic and operational advantages in the Barnett and Haynesville shales."

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