El Paso Corp. has entered a deal to sell its exploration and production arm for $7.15 billion to a group of private equity firms led by Apollo Global Management, LLC.
Kinder Morgan, Inc., which announced in October that it would acquire pipeline giant El Paso, said that proceeds from the sale of El Paso’s upstream unit would be used to pay off a portion of Kinder Morgan’s debt in its acquisition.
Both deals are expected to close in the second quarter of 2012. Kinder Morgan’s $21.1 billion mega-deal was announced in October.
Apollo will lead the consortium of firms acquiring El Paso’s exploration and production business, EP Energy Corp. The investors include Riverstone Holdings, LLC, Russian-born industrialist Len Blavatnik’s Access Industries and other unnamed firms.
El Paso, a Houston-based natural gas pipeline company, did not comment on the Apollo deal.
The company’s exploration and production assets include land in the Eagle Ford and Haynesville shales in Texas and Louisiana, as well as smaller holdings in the shallow-water Gulf of Mexico and offshore Brazil.
The properties’ proved reserves total 3.4 trillion cubic feet equivalent and produced an average 782 million cubic feet equivalent per day in 2010, according to the corporate website.
El Paso had previously planned to divest its exploration and production arm. Last spring, it announced plans to spin off the unit into its own company. Kinder Morgan executives had said they would put El Paso’s exploration and production assets up for sale, though it wasn’t clear if they would be sold as a unit or in pieces.
“We are pleased that this pending sale will allow the El Paso exploration and production assets to be kept intact as a single entity,” Kinder Morgan CEO Richard Kinder said in a written statement. “We thank EP Energy employees for their efforts to build a strong company and in facilitating the sales process.”
The El Paso deal is Apollo Global Management’s latest major play to expand its footprint in the energy world. The global New York City-based firm has a history of major investments in real estate and capital markets.
“Apollo is acquiring a company with an impressive portfolio of valuable natural resource assets, a talented management team and a remarkable group of highly skilled employees,” Josh Harris, senior managing director at Apollo Global Management, said in a written statement. “We look forward to building on El Paso’s impressive track record of success in partnership with Apollo’s natural resources expertise.”
At $107 oil and moving higher; I wonder if they sold to low.
Another local company Oncovista or OVIT has 20 times normal volume today; CEO co-founded Ilex Oncology which Genzyme bought for $1 Billion.
http://www.youtube.com/watch?v=Mh_RZMh-xcU
El Paso is pretty good at selling off their E & P unit. They did the same sort of thing back in 84. Sold their E & P to Burlington Northern. That created Meridian Exploration. Later on, after a couple different acquisitions, the name was changed to Burlington Resources.
This is so well-written and understandable. I wish it could be published. I think we all would have a much better idea of what’s really going on. I’m looking forward to more.