El Paso and KKR form midstream joint venture

El Paso Midstream Group, Inc., a subsidiary of El Paso Corporation, and Kohlberg Kravis Roberts & Co. (KKR) have executed agreements to create a new midstream joint venture. El Paso Midstream will operate the new venture, and they will each own a 50% interest. The transaction is expected to close by December 31, 2010.

Under the terms of the agreement, KKR will acquire a 50% interest in El Paso's Altamont gathering and processing assets for US$ 125 million. The Altamont gathering and processing assets include approximately 800 miles of pipelines, 3800 bpd of fractionation capacity and 40 million ft3/d of natural gas processing capacity. These assets serve El Paso Exploration & Production Company, as well as third party producers. The Altamont field is one of El Paso's core oil programmes, and El Paso expects to increase its drilling activity from a current two-rig programme to three rigs in 2011 and six rigs by 2013.

In addition, KKR and El Paso will each invest up to approximately US$ 500 million in future midstream projects including, but not limited to, the Marcellus Ethane Pipeline System (MEPS) in the Marcellus shale and the Camino Real Pipeline in the Eagle Ford shale. El Paso previously announced that it is partnering with Spectra Energy to develop the MEPS project, and expects to have a partner for the Camino Real Pipeline project.

"The emergence of unconventional resources is driving a need for significant investment in midstream infrastructure in the US, and El Paso's talented team is developing projects that are very well positioned to meet these needs." Marc Lipschultz, the global head of KKR's Energy and Infrastructure business, said.

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