update on el paso acquisiton of old valero and teco systems el paso closer to acquiring pg & e ' s texas assets
el paso energy corp . is closer to acquiring pg & e corp . ' s texas gathering and
liquids businesses for about $ 840 million in stock and debt after signing a
consent agreement earlier this week . the deal includes 8 , 500 miles of natural
gas transmission pipelines that transport about 2 . 8 bcf / d , nine processing
plants that process 1 . 5 bcf / d , and a 7 . 2 bcf natural gas storage field .
pg & e national energy group bought the properties about three years ago from
valero energy and teco for $ 1 . 02 billion , but had been unable to turn a
profit . when it purchased the properties , pg & e paid a premium price to enter
the west - east gas transportation market . however , since the sale , the basis
between waha in west texas and katy and the houston ship channel has
tightened and pg & e could not overcome the roadblocks to become a major
player .
the assets , which also include significant natural gas liquids pipelines and
fractionation facilities , serve all of texas ' major metropolitan areas , large
industrial load centers and several natural gas trading hubs . the book value
before the sale to el paso was estimated to be between $ 2 . 5 billion and $ 2 . 7
billion .
before buying pg & e ' s assets , el paso was already an experienced player in the
liquids game . when the deal was first announced , el paso said that 70 % of the
cash flow generated by the texas assets came from stable fee - based activities
with the balance from processing . el paso , which is close to completing a
merger with the coastal corp . , expects to actively manage the risk on the
non - fee - based side .
as part of the normal review process , the consent agreement signed this week
is subject to the approval of the federal trade commission . el paso also has
to finalize a similar agreement with the state of texas . once the agreements
are approved , el paso energy expects to close the transaction in the fourth
quarter .
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update on el paso acquisiton of old valero and teco systems
el paso closer to acquiring pg & e ' s texas assets
el paso energy corp . is closer to acquiring pg & e corp . ' s texas gathering and
liquids businesses for about $ 840 million in stock and debt after signing a
consent agreement earlier this week . the deal includes 8 , 500 miles of natural
gas transmission pipelines that transport about 2 . 8 bcf / d , nine processing
plants that process 1 . 5 bcf / d , and a 7 . 2 bcf natural gas storage field .
pg & e national energy group bought the properties about three years ago from
valero energy and teco for $ 1 . 02 billion , but had been unable to turn a
profit . when it purchased the properties , pg & e paid a premium price to enter
the west - east gas transportation market . however , since the sale , the basis
between waha in west texas and katy and the houston ship channel has
tightened and pg & e could not overcome the roadblocks to become a major
player .
the assets , which also include significant natural gas liquids pipelines and
fractionation facilities , serve all of texas ' major metropolitan areas , large
industrial load centers and several natural gas trading hubs . the book value
before the sale to el paso was estimated to be between $ 2 . 5 billion and $ 2 . 7
billion .
before buying pg & e ' s assets , el paso was already an experienced player in the
liquids game . when the deal was first announced , el paso said that 70 % of the
cash flow generated by the texas assets came from stable fee - based activities
with the balance from processing . el paso , which is close to completing a
merger with the coastal corp . , expects to actively manage the risk on the
non - fee - based side .
as part of the normal review process , the consent agreement signed this week
is subject to the approval of the federal trade commission . el paso also has
to finalize a similar agreement with the state of texas . once the agreements
are approved , el paso energy expects to close the transaction in the fourth
quarter .
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