El Paso Energy Partners LP reaffirmed its earnings, cash flow and distributions guidance for the year and confirmed that it will buy the San Juan Basin gathering, compression, and treating system from general partner El Paso Corp., which intends to use the proceeds to strengthen its balance sheet. The San Juan assets include a 5,500-mile gathering system that is connected to 9,600 gas wells in northwestern New Mexico.

The partnership expects net income to be $94 million, or $0.69 per common unit, and cash flow (as measured by adjusted earnings before interest, taxes, depreciation, and amortization) to be $270 million for the full year. The current distribution to common unitholders is $0.65 per quarter ($2.60 per year), and the partnership expects to be able to deliver on its previous guidance to increase this payout to $0.6725 per quarter ($2.70 per year) by year-end.

Once the San Juan assets are purchased, the partnership will assume the role of the largest gatherer of conventional natural gas in the San Juan Basin. In the first quarter, the system gathered an average of 1.2 Bcf/d of natural gas, most of which was processed by EPN’s Chaco cryogenic gas processing plant.

“The acquisition of the San Juan Basin gathering system, announced yesterday by El Paso Corp., provides EPN with a tremendous growth opportunity. The acquisition will significantly add to the partnership’s cash flow and strengthen its balance sheet,” said EPN CEO Robert G. Phillips. “These assets are the premier midstream assets owned and operated by El Paso Corp. through its Field Services subsidiary.

“We have managed these assets since 1996 and are very familiar with them,” he added. “The long-lived nature of the natural gas reserves committed to this system produce the long-term, consistent cash flow that is attractive to our partnership.”

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