Subject: enbridge buys koch ' s east texas midstream assets for $ 231 m
ngi ' s daily gas price index
published : october 26 , 2001
enbridge buys koch ' s east texas midstream assets for $ 231 m
enbridge energy partners lp is buying gas gathering , treating , processing and transmission assets in east texas from koch midstream services for $ 230 . 5 million . the package includes all of the east texas system , which gathers 400 mmcf / d for delivery into the carthage hub .
enbridge energy company president dan c . tutcher said the assets are a " natural fit " with enbridge ' s existing texas assets and will significantly expand the company ' s " geographic footprint " in the region as well as its energy commodity mix . " we expect the acquisition to be immediately accretive to the partnership ' s distributable cash flow , and excellent prospects exist for further organic growth of the east texas system . ' '
enbridge partners will acquire 1 , 880 miles of various diameter gathering lines , 37 compressor stations , four gas treating plants with a capacity of 595 mmcf / d and three gas processing plants with a combined capacity of 375 mmcf / d . the transaction is anticipated to close in december .
the intrastate system derives revenues from the purchase , transportation and resale of natural gas . additionally , when natural gas liquids fractionation spreads are positive , the option exists to extract ngls from purchased gas , thus leveraging income with incremental processing revenue , the company noted . the partnership expects that the direct commodity price exposures inherent in gas purchase and resale activities and in gas processing will be suitably mitigated through a hedging strategy .
it forecasts gas supply available to the system will be 400 - 420 mmcf / d in 2002 . based on this estimate , the acquisition would contribute incremental ebitda of between $ 26 million and $ 32 million for the year , while distributable cash flow would increase by between $ 0 . 10 and $ 0 . 15 per unit , with further improvements anticipated in 2003 . the forecasts assume that acquisition financing will consist of 50 % debt and 50 % equity , in line with enbridge partners target long - term capital structure .
enbridge partners also reported third quarter net income of $ 6 . 6 million , or $ 0 . 13 per common unit , compared with net income of $ 14 . 2 million , or $ 0 . 42 per unit , for the third quarter in 2000 . the decline was attributed mainly to an adjustment to oil inventory due to shippers of $ 5 . 4 million . the adjustment was the result of what enbridge said were refinements in the oil loss estimation process , as well as improvements in the accuracy of measuring oil losses while developing new software applications .
third quarter deliveries were 1 , 208 million b / d compared to 1 , 272 mmb / d for the same period in the prior year . the partnership expects that deliveries will increase over the remainder of the year , to average between 1 . 30 and 1 . 33 mmb / d . however , its delivery estimates for 2001 and 2002 are down from prior expectations because of lower production forecasts for conventional heavy crude oil , which stem from the current wide price differential between heavy and light crude . for 2002 , growing oil sands production is anticipated to boost full - year average deliveries to between 1 . 35 and 1 . 43 mmb / d .
" the partnership ' s forecast indicates that crude oil delivery volumes , which have languished for the past several quarters , will start to improve modestly in the near term with more significant increases occurring in the latter half of 2002 , " said tutcher . " the major contributing factor will be increased production from the immense oil sands reserves in western canada . we also anticipate further successes from our acquisition strategy , which will increase earnings and diversify our sources of income . the partnership ' s primary objective over the next two to three years is to accelerate the growth of cash distributions to unitholders . to that end , we are confident that the acquisition of the east texas facilities combined with some improvement in liquid hydrocarbon deliveries will position the partnership to consider a distribution increase in 2002 . ' '