The acquisition has a total purchase price of approximately $US3 billion, including the assumption of debt.
Hiland’s assets consist of crude oil gathering and transportation pipelines and gas gathering and processing systems, primarily serving production from the Bakken Formation in North Dakota and Montana, in the United States.
Kinder Morgan said the transaction creates a premier midstream platform in the Bakken, with a significant amount of acreage dedicated under long-term gathering agreements. Hiland’s customers include Continental Resources, Oasis Petroleum, XTO Energy, Whiting Petroleum Corporation and Hess Corporation, among others.
Hiland’s crude oil gathering systems, located in North Dakota and Montana, consist of approximately 1,971 km of gathering pipelines that deliver crude oil to the basin’s major takeaway pipelines and rail terminals. At closing, the gathering systems will have more than 1.8 million acres dedicated under long-term, fee-based agreements with major Bakken oil producers.
Hiland’s crude oil transportation pipeline, the Double H Pipeline, is a 780 km pipeline that is expected to begin service by the end of the month and will transport crude oil from Hiland’s Dore Terminal in North Dakota to Guernsey, Wyoming, where Double H interconnects with Pony Express Pipeline for further transportation to Cushing, Oklahoma.
The Double H Pipeline will have an initial capacity of approximately 84,000 bpd, with an expansion to approximately 108,000 bbl/d in 2016. The pipeline has firm take-or-pay contracts for approximately 60,000 bbl/d and recently extended an open season for additional commitments.
Hiland’s gas gathering and processing systems in North Dakota and Montana consist of approximately 2,896 km of gathering pipelines and, upon completion of a plant expansion in 2015, 240 MMcf/d of gas processing capacity and 30,000 bbl/d of fractionation capacity. These systems process associated gas from oil production and have approximately 3.7 million acres dedicated under long-term agreements with major Bakken oil producers.
“We are delighted to establish a substantial midstream footprint in one of the most prolific oil producing basins in the United States,” said Kinder Morgan’s Chairman and CEO Richard D. Kinder.
Kinder Morgan anticipates retaining nearly all of Hiland’s approximately 430 employees and maintaining its already significant presence in Oklahoma.
The transaction is subject to customary closing conditions, including regulatory approval. Kinder Morgan expects to close the transaction in the first quarter of this year.