By a News Reporter-Staff News Editor at Energy Weekly News -- El Paso Pipeline Partners, L.P. (NYSE: EPB) announced its second quarter cash distribution per common unit of $0.65 ($2.60 annualized) payable on Aug. 14, 2014, to unitholders of record as of July 31, 2014. This represents a 3 percent increase over the second quarter 2013 cash distribution per unit of $0.63 ($2.52 annualized) and is the same as the first quarter 2014 distribution.
Chairman and CEO Richard D. Kinder said, "EPB had a nice increase in distributable cash flow for the second quarter, up 9 percent from the same period last year to $141 million. Earnings before DD&A and certain items were $286 million compared to $285 million for the second quarter of 2013. Results included good performance at Colorado Interstate Gas Company (reflecting completion of the High Plains expansion project) and the benefit of EPB's acquisition of Kinder Morgan, Inc.'s (KMI) interests in Ruby Pipeline, Gulf LNG and Young Gas Storage, effective at close of business April 30. These contributions were partially offset by previously announced rate case settlements that resulted in lower rates on Southern Natural Gas (SNG) and Wyoming Interstate Company (WIC) pipelines along with lower rates on contract renewals on WIC."
EPB reported second quarter distributable cash flow before certain items of $141 million, up 9 percent from $129 million for the same period last year. Distributable cash flow per unit before certain items was $0.62 compared to $0.60 for the second quarter of 2013. Second quarter net income attributable to EPB before certain items was $131 million compared to $141 million for the same period last year. Net income was $131 million compared to $136 million for the second quarter of 2013.
For the first six months of 2014, EPB generated distributable cash flow before certain items of $304 million compared to $298 million for the same period last year. Distributable cash flow per unit before certain items was $1.37 versus $1.38 for the first six months of 2013. Net income attributable to EPB before certain items was $304 million compared to $315 million for the first half of 2013. Net income was $304 million for the first two quarters compared to $310 million for the same period last year. 2014 Outlook As previously announced, EPB expects to declare cash distributions of $2.60 per unit for 2014, a 2 percent increase over the $2.55 per unit it distributed for 2013. Other News In May, the Federal Energy Regulatory Commission (FERC) accepted a request by Gulf LNG Liquefaction Company (GLLC) to begin the environmental review process for a project to install LNG liquefaction and export facilities at its existing LNG regasification terminal near Pascagoula, Mississippi. GLLC recently entered into a memorandum of understanding with a third party to begin negotiations on a definitive liquefaction agreement. GLLC has also commenced work on a FERC-FEED study. The proposed project, which already has Free Trade Agreement (FTA) LNG export authority, would provide up to 10 million tonnes per year of LNG export capacity. An application to export to non-FTA countries is pending. Subject to obtaining sufficient commitments from potential customers and regulatory approval, construction could begin in June 2016, with initial exports of LNG occurring in 2019.
EPB previously announced the purchase from KMI of its 50 percent interest in Ruby Pipeline, 50 percent interest in Gulf LNG and 47.5 percent interest in Young Gas Storage, effective at the close of business April 30. The transaction, which was immediately accretive to EPB, had a value of approximately $2 billion, including $1.012 billion of proportionate debt at Ruby and Gulf LNG, resulting in an equity purchase price of $972 million, consistent with EPB's budget. A portion of the transaction was funded with EPB common units issued to KMI, valued at approximately $97.2 million. The remaining equity purchase price was funded using proceeds from public equity and debt issuances, and borrowings under EPB's revolving credit facility.
In the first quarter, subsidiaries of EPB and Shell filed a certificate application with the FERC for the Elba Liquefaction Project, seeking authority to construct and operate new natural gas liquefaction and export facilities at EPB's Southern LNG Company's (SLNG) natural gas terminal on Elba Island, near Savannah, Georgia. The project has already received FTA LNG export authority and an application to export to non-FTA countries is pending, although not a required prerequisite for the liquefaction contract with Shell. At full development, the Elba Liquefaction Project is expected to have total capacity of approximately 350 million cubic feet per day of natural gas (2.5 million tonnes per year of LNG). EPB's investment in the liquefaction project and related facilities is approximately $1.3 billion. Subject to regulatory approvals, initial production from the project is expected to occur in late 2016 or early 2017.
Elba Express Company (EEC) and SNG continue to advance previously announced expansion projects to provide incremental natural gas transportation service to support the needs of customers in Georgia, South Carolina and northern Florida. Expansion capacity would also serve the proposed Elba Liquefaction Project.
An open season on EEC in mid 2013 led to binding customer contracts for incremental capacity of approximately 800,000 dekatherms per day (Dth/d), which includes approximately 240,000 Dth/d contracted to SNG. In the first quarter, EEC submitted an application with the FERC requesting authorization to add north to south transportation capacity to accommodate these contract quantities. Pending regulatory approvals, EEC will begin phasing in service as early as June 2016. The expected capital expenditure for this expansion is approximately $190 million.
SNG filed an application with the FERC in May to add approximately 240,000 Dth/d of new firm transportation capacity from its interconnection with EEC to certain zonal customers. The proposed approximately $86 million expansion project will provide shippers greater supply and market access, and will entail constructing interconnects, pipeline looping, a compressor station and additional improvements. Subject to regulatory approval, construction is anticipated to begin in the third quarter of 2015 with an expected in-service date of June 2016. Financings In May, EPB issued $600 million in senior notes and issued 7.82 million common units in a secondary offering raising approximately $255 million in gross proceeds (based on the day of the launch closing price). Also in May, EPB issued common units to KMI valued at approximately $97.2 million. The funds from these issuances of common units and senior notes transactions were used to partially fund its acquisitions from KMI.
EPB raised approximately $41 million in gross proceeds under its at-the-market equity program during the second quarter, bringing EPB's total equity issuances to approximately $428 million through the first six months of the year.
Keywords for this news article include: El Paso Pipeline Partners, El Paso Pipeline Partners L.P., Energy, L.P., Natural Gas, Oil & Gas.
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