El Paso raises $244 million from asset sales, will go to debt

Petroleum News

El Paso Corp. raised $244 million through asset sales that included 9.9 percent of its interest in GulfTerra Energy Partners L.P. to New York investment bank Goldman Sachs, El Paso said Oct. 3. The company said it would use the proceeds to pay down debt.

Goldman Sachs, in a separate transaction, purchased 3 million newly issued common units from the GulfTerra limited partnership, which controls a diversified set of midstream assets. The combined purchase price for the 9.9 percent general partner interest and common units was $200 million, with $88 million attributed to the general partner interest.

Houston-based El Paso said it would continue to own the remaining 90.1 percent interest in GulfTerra's general partner as well as about 22 million common units. In conjunction with the transaction, GulfTerra redeemed all of the Series B Preference Units held by El Paso for $156 million, giving El Paso total proceeds of $244 million when including the $88 million from the Goldman Sachs deal.

“The monetization of a significant equity stake in GulfTerra is a positive step for El Paso,” said Doug Foshee, El Paso's president and chief executive officer. “The sale of the 9.9 percent interest in the GulfTerra general partner confirms the significant value that resides in the general partner interest ...”

Offshore, the GulfTerra operates natural gas and oil pipelines and platforms in deepwater Gulf of Mexico. Onshore, the partnership operates intrastate natural gas pipelines, natural gas gathering and processing facilities, natural gas liquids transportation and fractionation assets, and salt dome natural gas and natural gas liquids storage facilities.