KMP Completes Crosstex Buy

Late last week, Kinder Morgan Energy Partners LP (KMP - Analyst Report) closed the previously announced acquisition of natural gas treating business from Dallas-based Crosstex Energy LP (XTEX - Snapshot Report) and its general partner Crosstex Energy Inc. (XTXI) - Snapshot Report for approximately $266 million. 

As part of the transaction, Kinder Morgan purchased approximately 290 amine-treating and dew-point control plants from natural gas company Crosstex. These plants are primarily located in Texas and Louisiana , with additional facilities in Mississippi , Oklahoma , Arkansas and Kansas. 

Kinder Morgan will use these natural gas treatment plants in servicing its Texas Intrastate customers and to other producers in various supply basins, including the fast growing shale plays. Following the deal, Kinder Morgan has become the largest provider of contracted natural gas treating services in the country. 

The Crosstex asset acquisition will allow the partnership to expand its natural gas business through the inclusion of additional fee-based assets that produce stable cash flows. Kinder Morgan expects the transaction to be immediately accretive and to add value to its business. 

Houston-based Kinder Morgan Energy Partners L.P. is the largest independent owner and operator of petroleum product pipelines in the U.S. , transporting nearly 2 million barrels per day of gasoline, jet fuel, diesel fuel, and natural gas liquids. The partnership also has capacity to transport 7 billion cubic feet/day (Bcf/d) of natural gas. It owns or operates more than 26,000 miles of pipeline and approximately 170 terminals. The terminals store petroleum products and chemicals, besides handling bulk materials like coal and petroleum coke. Kinder Morgan is also the largest carbon dioxide marketer and transporter in the country. 

We currently rate Kinder Morgan units as Neutral.