Kinder Morgan – KKR Announce Midstream Deal for Camino Real and Altamont Assets

$ 300 Million for Altamont Assets (Utah) and the Camino Real Gathering System (Eagle Ford Shale)

Kinder Morgan is acquiring KKR’s 50% interest in a joint-venture with El Paso that controls gathering and processing assets in Utah and the Eagle Ford Shale for $300 million. The deal is a precursor to the $20+ billion Kinder Morgan – El Paso acquisition that will close in May. At closing of both deals, Kinder will own 100% of the two systems.

Both systems were in place to help gather and process El Paso’s upstream oil and gas production in the areas. The Camino Real System in South Texas has capacity of 150 mmcf/d and 110,000 b/d. The Altamont system is larger and includes over 1,000 miles of pipelines, a processing plant, and a natural gas fractionator. [Read more…]

Reliance – Apollo Evaluate El Paso Assets

Since Kinder Morgan’s $21+ billion acquisition of El Paso was announced, it was believed Kinder would sell the accompanying exploration and production assets. We explored the possibility in more detail in the blog post “El Paso’s Eagle Ford Assets on the Market

The real question is whether the e&p assets will be sold all together or if they will be sold in parts. I’m sure Mr. Kinder knows how much other deals have gone for and he’ll want to get a similar premium for El Paso’s Eagle Ford assets. If he doesn’t get the premium or dang close baked into a deal for the entire business unit, he’ll sell the assets off one by one. Expect a decision on selling the whole or parts real soon. Publicized estimates of El Paso’s e&p value are around $8 billion.

Both Reliance Industries and Apollo Global Management are in talks to buy the unit. Reliance would be buying an operated stake in the U.S. where to date it only acts as a non-operated partner in the Marcellus Shale. Apollo would be adding a significant e&p business that it would likely grow and market to other companies or eventually IPO. Private equity firms like Apollo usually hold assets for 3-10 years.  [Read more…]

Big Firms Say Shale Plays Are Here To Stay

“Shale gases have redefined natural gas supply” is the quote from Hill Vaden of Wood Mackenzie. As large scale firms enter shale plays across the U.S., it is an indication that things have changed for the long term. The Kinder Morgan – El Paso merger is the latest shale driven deal that expands a companies foot print and leverage to the growing shale boom.

With Exxon and international companies like Statoil in the fray, you can bet many of the development decisions that are made today are part of long – very long term plans. Shale plays are ushering in a new wave of domestic development. Just visit North Dakota, Pennsylvania, or Texas if you don’t believe me. [Read more…]

El Paso’s Eagle Ford Assets on the Market

El Paso Corporation and Kinder Morgan announced a $38 billion transaction where the later will acquire all of El Paso’s assets. The deal will create a pipeline and midstream company that is the 4th largest energy company in North America (Enterprise Value of >$90 Billion).

El Paso had plans to spin off its exploration and production business at the end of the year, but those plans are delayed until Kinder Morgan has full control of the assets. The company still plans to divest the E&P assets, but is more likely to sell individual assets instead of spinning off a new entity. That means there are Eagle Ford wells and acreage on the market. [Read more…]

Eagle Ford Shale Region Experiencing a Record Drought

South Texas is experiencing one of the worst three droughts on record.  Producers are coming up with creative ways to conserve resources and tap water resources that have gone unused for many years. [Read more…]