Monday, El Paso Pipeline Partners, L.P. (EPB), said that it has completed the acquisition of an additional 18% stake in Colorado Interstate Gas Company from Oil and gas producer El Paso Corp. (EP) for nearly $215 million.
Houston, Texas-based El Paso said the proposed acquisition increases its interest in Colorado Interstate Gas Company to 58%, and is immediately accretive to distributable cash flow.
Lately, El Paso Pipeline Partners issued 12.65 million units, which generated cash proceeds of nearly $217 million, and used the equity issuance proceeds to finance the deal.
The terms of the deal were unanimously endorsed by the Board of Directors of the general partner, El Paso Pipeline GP Company, L.L.C., based in part on the unanimous approval and recommendation of the board's conflicts committee.
Jim Yardley, president and chief executive officer for the general partner of El Paso Pipeline Partners said, "The acquisition increases our interest in CIG's well-positioned assets with strong cash flows and organic growth opportunities."
The company said the conflicts committee engaged Tudor, Pickering, Holt & Co. to act as its independent financial advisor and to provide a fairness opinion.
The company's management also expects to recommend to the Board of Directors of the general partner an increase in the quarterly cash distribution to $0.35 per unit or $1.40 per unit on an annualized basis, beginning with the distribution to be declared and paid in the fourth quarter of the fiscal year 2009. This leads to an increase of 6% from the announced second quarter 2009 quarterly rate of $0.33 per unit and an increase of 22% above the partnership's original minimum quarterly distribution rate.
In a separate statement, El Paso Corp. announced that it formed a strategic 50:50 joint venture with infrastructure private equity fund, Global Infrastructure Partners or GIP, to construct, own and operate the Ruby interstate natural gas pipeline.
The Ruby pipeline project, from Wyoming to Oregon, is estimated to require an investment of up to $3.0 billion and is expected to be placed into service in March 2011.
EPB is currently trading at $19.64, up $0.50 or 2.62%, on a volume of 0.37 million shares, while EP is trading at $10.35, up $0.22 or 2.20%, on a volume of 4.95 million shares on the NYSE.
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