El Paso Corporation (EP) announced that it has agreed to dispose of its remaining 49% interest in Southern LNG Company, L.L.C. (“SLNG”) and El Paso Elba Express Company, L.L.C. (Elba Express) and a 15% interest in Southern Natural Gas Company to El Paso Pipeline Partners, L.P. (EPB) for $1.133 billion.
El Paso Pipeline Partners will pay the consideration partly through cash and partly through issue of debts. The partnership will pay $415 million in cash and issue promissory notes to El Paso Corporation.
Once the acquisition closes by the end of November 2010, El Paso Pipeline Partners will become the 100% owner of SLNG and Elba Express and hold a majority interest (60%) in Southern Natural Gas Company.
El Paso Corporation has gradually been shedding its interest in these assets. Previously, in June 2010, El Paso Pipeline Partners acquired a 16% interest in Southern Natural Gas Company for $394 million while, in March 2010, the partnership acquired a 51% interest in both SLNG and Elba Express for $810 million.
El Paso Pipeline Partners is a Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines and storage assets. El Paso Corporation currently owns a 52% limited partnership interest and a 2% general partner interest in the partnership.
The third quarter 2010 operating earnings of El Paso Corporation were 22 cents per share versus 23 cents per share recorded in the year-ago quarter. The Zacks Consensus Estimates for fourth-quarter 2010, fiscal year 2010 and fiscal year 2011 are 24 cents per share, $1.00 per share and $1.10 per share, respectively.
El Paso Corporation currently retains a Zacks #3 Rank (short-term Hold rating). We also maintain a Neutral rating on the stock.
Based in Houston, Texas, El Paso Corporation involves in the natural gas transmission and in the exploration and production sectors of the energy industry. The company primarily operates in United States and has some exposure in Brazil and Egypt.
EL PASO CORP (EP): Free Stock Analysis Report
EL PASO PIPELIN (EPB): Free Stock Analysis Report
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