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Kinder Morgan Energy Partners Announces $245 Million Terminal Acquisition

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    Article from my files on KM purchase of TGS terminals in Texas – now largest petcoke handler at ~33% US domestic production from addition of 10 MM tons TGS terminals & 7 MM tons from KM existing terminals in 2005. Agreements are in place for TGS to develop new terminal projects with KM having option to purchase them.
    Charlie Randall

    HOUSTON, April 11, 2005 /PRNewswire-FirstCall via COMTEX/ — Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today announced it has purchased seven bulk terminal operations from Trans-Global Solutions, Inc. (TGS) for approximately $245 million. KMP will pay approximately $184 million in cash and $46 million in KMP limited partner units at closing (expected by the end of April), and an additional $15 million in KMP limited partner units two years after closing.

    “This is a strategic acquisition that will make KMP the largest handler of petroleum coke (petcoke) in the United States,” Chairman, CEO and President Richard D. Kinder said. “We expect this transaction will be immediately accretive to unitholders and we estimate we are purchasing the assets at approximately 7.5 times distributable cash flow.” This acquisition was not included in KMP’s published 2005 budget, which is posted on the company’s web site, .
    The TGS bulk terminal assets are located in Texas, including facilities at the Port of Houston, the Port of Beaumont and the TGS Deepwater Terminal located on the Houston Ship Channel. “TGS has long-term petcoke handling contracts in place with major Texas refineries, including ExxonMobil, Shell, Lyondell-Citgo, ConocoPhillips and Premcor, which make these fee-based operations an ideal fit for KMP,” Kinder said. “As we discussed at our annual investor conference in January, we believe that U.S. refineries will process more heavy crude in the future, generating more petcoke. This should enable KMP to capture additional petcoke related opportunities.” The TGS facilities also provide handling and storage services for a variety of other bulk materials.
    In 2005, TGS projects its terminals will handle about 10 million tons of petcoke, and KMP expects to handle about 7 million tons of petcoke at its existing facilities. Combined, KMP will handle approximately 33 percent of the domestic petcoke market. Petcoke is a carbonaceous solid residual by-product of the oil refining coking process and is used primarily in the cement and power generation industries.
    At closing, KMP will execute a development agreement with TGS, whereby TGS will develop new solid bulk projects, including petcoke and coal projects, which KMP will have the right to purchase. “We are pleased to enter into this relationship with TGS, which is well respected and has a strong track record of developing greenfield projects,” Kinder said. Bill Scott, Chairman and CEO of TGS, stated, “TGS is eager to have the opportunity to focus its resources on identifying and developing new project opportunities in a strategic alliance with the proven operations team at KMP.”
    The parties have satisfied closing conditions with respect to Hart-Scott-Rodino. The transaction is subject to other standard closing conditions including receipt of certain regulatory and third party approvals.
    Kinder Morgan Energy Partners, L.P. is one of the largest publicly traded pipeline limited partnerships in America. KMP owns or operates more than 25,000 miles of pipelines and approximately 135 terminals. Its pipelines transport more than 2 million barrels per day of gasoline and other petroleum products and up to 8.4 billion cubic feet per day of natural gas. Its terminals handle over 67 million tons of coal and other dry-bulk materials annually and have a liquids storage capacity of approximately 65 million barrels for petroleum products and chemicals. KMP is also the leading provider of CO2 for enhanced oil recovery projects in the United States.
    The general partner of KMP is owned by Kinder Morgan, Inc. (NYSE: KMI), one of the largest energy transportation and storage companies in America. Combined, the two companies have an enterprise value of approximately $26 billion.
    SOURCE Kinder Morgan Energy Partners, L.P.
    Larry Pierce, Media Relations, +1-713-369-9407, or Mindy Mills, Investor Relations,
    +1-713-369-9490, both of Kinder Morgan Energy Partners, L.P.

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