Spectra Energy Partners, LP has entered into a definitive agreement with Atlas Pipeline Partners, L.P. to acquire all of the ownership interests of NOARK Pipeline System, Limited Partnership (NOARK) for approximately $300 million in cash, subject to customary closing adjustments.

The primary asset to be acquired is Ozark Gas Transmission, L.L.C. (OGT), a 565-mile, Federal Energy Regulatory Commission (FERC) regulated interstate natural gas transmission pipeline system that extends from southeast Oklahoma through Arkansas into southeast Missouri. With interconnects to multiple interstate pipeline systems, including Spectra Energy Corp’s Texas Eastern Transmission (Texas Eastern) system, OGT links natural gas supplies in the Fayetteville Shale and Arkoma Basin to important regional, Midwest and Northeast markets.

Also included in the transaction is Ozark Gas Gathering, L.L.C., a 365-mile, fee-based natural gas gathering system located in eastern Oklahoma and western Arkansas.

For the year ended December 31, 2008, NOARK generated earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $46 million.

“These high quality assets will significantly expand our asset base into this important supply region, and we are looking forward to adding them to our strong existing portfolio,” said Greg Rizzo, president and chief executive officer, Spectra Energy Partners. “This acquisition, which will be immediately accretive for our unitholders, is consistent with our focus on fee-based pipeline and storage businesses and, given OGT’s interconnect with Texas Eastern, it complements Spectra Energy Corp’s portfolio.”

Based on the expected increase in cash flow resulting from this acquisition, management has recommended to the board of directors of the general partner that the quarterly cash distribution per limited partnership unit be increased by $0.01 beginning the first full quarter following the transaction closing. This ongoing increase would be over and above any increase related to growth from current assets.

The Company expects long-term financing for the transaction to be a combination of debt and equity consistent with its current and target capital structure. Pending long-term financing, the Company expects to utilize its existing credit facility and a bridge loan from its sponsor, Spectra Energy Corp.

“This financing approach retains more than sufficient liquidity to fund projects currently in execution into 2010, while maintaining our strong balance sheet and investment-grade credit metrics,” added Rizzo.

Tags: Spectra Energy