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El Paso Launches Offering for Pipeline Partnership
Making good on its promise made early this year, El Paso Corp. has launched an initial public offering for a master limited partnership (MLP), which will own and operate a portion of its natural gas transportation pipelines, storage and other midstream assets.
El Paso’s diverse system touches about a quarter of all the molecules of natural gas delivered in the United States. Several systems are wholly owned: Tennessee Gas Pipeline (TGP), El Paso Natural Gas, Southern Natural Gas (SNG), Colorado Interstate Gas (CIG), Wyoming Interstate Co. (WIC), Mojave Pipeline and Cheyenne Plains Gas Pipeline.
El Paso CEO Doug Foshee said in February that an MLP would launch this year to allow El Paso to take advantage of new pipeline projects (see Daily GPI, Feb. 22). A few days ago, the company’s Pipeline Group chief Jim Yardley said El Paso was considering additional Rocky Mountain natural gas pipeline projects, but instead of the west-to-east route, it was considering additional capacity projects to California markets (see Daily GPI, Nov. 7).
Initially, El Paso Pipeline Partners LP will own WIC, which serves the Rocky Mountain region, and a 10% interest in each of the CIG and SNG pipelines, which operate in the Rocky Mountain and Southeastern regions of the United States, respectively. El Paso Corp. will continue to own the other 90% of CIG and SNG.
The MLP will offer 25 million common units that represent limited partnership interests, and the underwriters will have a 30-day over-allotment option to purchase up to 3.75 million more units. The MLP will be listed on the New York Stock Exchange and traded under the symbol “EPB.” The common units offered to the public will represent 28.9% of the outstanding equity of El Paso Pipeline Partners, or 33.2% if the underwriters exercise, in full, their over-allotment option. El Paso Corp. will indirectly own the remaining equity interests in the partnership.
Before the offering closes, SNG will transfer to El Paso Corp. its equity investment in Citrus Corp. and its wholly owned subsidiaries Southern LNG Inc. and Elba Express Co. LLC. These assets are not slated to become part of the partnership, El Paso said.
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