Summary
This Form 8-K filing by Enterprise Products Partners L.P. (EPD) on July 13, 2006, details the acquisition of natural gas gathering systems and related contracts from Cerrito Gathering Company, Ltd. The transaction, valued at $325 million, was financed through a combination of cash ($146 million) and the issuance of approximately 7.1 million EPD common units. This acquisition is strategically significant as it expands EPD's footprint in the South Texas Olmos and Wilcox Trends, adding substantial pipeline mileage and compression capacity, and securing long-term production dedications from Lewis Energy Group.
Key Highlights
- 1EPD acquired natural gas gathering systems and contracts from Cerrito for $325 million.
- 2The acquisition was funded with approximately $146 million in cash and the issuance of 7,115,844 EPD common units.
- 3The issued common units were valued at $25.12 per unit, based on the average closing price prior to the agreement.
- 4The acquired assets are located in South Texas and include approximately 484 miles of pipeline and 31,000 horsepower of compression.
- 5The transaction includes long-term production dedications from Lewis Energy Group, covering 45% of current rich gas production from the Olmos formation and lean gas from the Edwards Trend.
- 6EPD borrowed $75 million under its revolving credit facility to help finance the acquisition.
- 7The issuance of common units was made under an exemption from registration (Section 4(2) of the Securities Act of 1933), with EPD agreeing to file a shelf registration statement for resale within 30 days.
Frequently Asked Questions
The main event reported is Enterprise Products Partners L.P. (EPD) acquiring natural gas gathering systems and related contracts from Cerrito Gathering Company, Ltd. for a total consideration of $325 million.
The acquisition was financed through approximately $146 million in cash and the issuance of 7,115,844 shares of EPD's common units. EPD also utilized $75 million from its revolving credit facility.
The acquisition expands EPD's infrastructure in the South Texas Olmos and Wilcox Trends, adding significant pipeline and compression capacity. It also secures long-term production dedications from Lewis Energy Group, ensuring future throughput for EPD's systems.
No, the 7,115,844 common units were issued under an exemption from registration pursuant to Section 4(2) of the Securities Act of 1933. EPD has committed to filing a shelf registration statement for the resale of these units.