El Paso Field Services Company Agrees to Sell Interest in Viosca Knoll Gathering Company to Leviathan Gas Pipeline Partners L.P.

abarrelfullabarrelfull wrote on 16 Jan 2014 09:49
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January 8, 1999

El Paso Field Services Company, a business unit of El Paso Energy Corporation (NYSE:EPG), announced today that it has agreed to sell a 49 percent interest in Viosca Knoll Gathering Company (VKGC) to Leviathan Gas Pipeline Partners, L.P. (NYSE:LEV) for total consideration of $85.26 million. The transaction, which is subject to approval by Leviathan's Board of Directors and execution of definitive documents, is expected to close by March 31, 1999.

VKGC's sole asset is the Viosca Knoll Gathering System, a non-jurisdictional gathering system built in 1994 to serve the Main Pass, Mississippi Canyon and Viosca Knoll areas of the Gulf of Mexico southeast of New Orleans, Louisiana. The system, which consists of 125 miles of predominately 20-inch gas pipeline, approximately 7,000 horsepower of compression and related facilities, is capable of delivering approximately one billion cubic feet of gas per day into the facilities of a number of major interstate pipelines including Tennessee Gas Pipeline, Columbia Gulf Transmission, Southern Natural Gas, Transcontinental Gas Pipe Line and Destin Pipeline Company.

The total consideration to be received by El Paso Field Services will consist of $21.315 million in cash plus a number of newly issued Leviathan Common Units. The total number of new units will be determined by dividing $63.945 million by the "Market Price" of the Common Units as reported on the New York Stock Exchange during a to-be-determined trading reference period; provided, however, in no event shall the Market Price be less than $19.95 nor more than $24.15 per Common Unit. Immediately preceding closing, El Paso Field Services will make a cash contribution to VKGC in the amount of $33.35 million, an amount representing 50 percent of the total dollars currently outstanding under the VKGC Revolving Credit Facility.

"This sale is an indication of the tremendous synergies between El Paso Field Services and Leviathan and demonstrates our commitment to assist Leviathan in becoming the leader in offshore infrastructure development-a key element in our growth strategy," said Robert G. Phillips, president of El Paso Field Services. "El Paso Field Services is receiving a fair value for its investment in VKGC, and through our expanded ownership of Partnership Units we will continue to participate in the economic benefits of VKGC's and Leviathan's future growth.


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