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Kinder Buying Petrohawk Out of Haynesville JV

Kinder Morgan Energy Partners LP (KMP) is buying Petrohawk Energy Corp.'s half of the companies' Haynesville Shale midstream joint venture, KinderHawk Field Services, and also acquiring a 25% interest in Petrohawk's gas gathering and treating business in the Eagle Ford Shale, the companies said.

KMP is paying $855 million and assuming $65 million in debt for the assets. KMP also said it will spend about $220 million to build a 300,000 b/d crude/condensate pipeline to initially transport 50,000 b/d of condensate for Petrohawk from its production area in the Eagle Ford to the Houston Ship Channel. KMP CEO Richard Kinder noted that the midstream assets being acquired have fee-based contracts and, along with the new crude/condensate line, expand the partnership's footprint in the Haynesville and Eagle Ford.

"...[W]e expect opportunities in the prolific natural gas shales to be a primary driver of future growth at KMP," Kinder said. "In addition to our natural gas business segment, which will benefit from the acquisition, our products pipelines segment will realize growth from the construction and operation of the new pipeline that will transport condensate and crude oil."

While some in the industry have been "negative on the Haynesville" during the sprint to produce liquids-rich gas, "I would just say it's still a huge producing basin..." Kinder said. "Production is now about 5.5 Bcf/d after really just a couple years of development. Just by contrast...it took the Barnett Shale a decade to pass 5 Bcf [per day]."

Adding in the Bossier, "they're going to be producing big volumes of gas up there for 30 years or more, and that's the kind of production that will feed our gathering system over the years to come," Kinder said.

(To read the full story go to shaledaily.com.)

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