FOR IMMEDIATE RELEASE
PAA and Vulcan Complete Acquisition of Natural Gas Storage Entity from Sempra Energy
(Houston - September 15, 2005) Plains All American Pipeline, L.P. (NYSE: PAA) and Vulcan Capital announced today that PAA/Vulcan Gas Storage, LLC ("Plains/Vulcan") has completed the previously announced acquisition of Energy Center Investments Corporation ("ECIC"), an indirect subsidiary of Sempra Energy that develops and operates natural gas storage facilities. Plains/Vulcan is owned 50% by PAA and 50% by a subsidiary of Vulcan Capital. The total purchase price, excluding transaction costs, was $250 million.
ECIC's principal assets consist of (i) Bluewater Gas Storage, an operating natural gas storage facility in Michigan, (ii) Pine Prairie Energy Center, a natural gas storage facility under development in Louisiana and (iii) other similar projects and opportunities under various stages of review and evaluation. In addition to the purchase price, Plains/Vulcan anticipates investing approximately $260 million over the next several years to complete the Pine Prairie facility. Upon completion of this facility, PAA's proportionate total investment will be approximately $255 million.
As previously announced on its August 22nd conference call, based on the added visibility to future distributable cash flow provided by this transaction as well as the Partnership's current distributable cash flow coverage levels, management intends to recommend to Plains All American's board of directors a distribution increase of two and a half cents per quarter, or ten cents per unit on an annualized basis. The increase would become effective with its November 2005 distribution and would result in an annualized distribution rate of $2.70 per unit, representing an increase of 12.5% over the November 2004 distribution and a 3.9% increase over the August 2005 distribution. The Partnership noted that any increase in the distribution level is subject to the absence of any material adverse developments and the approval of its board of directors.
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties. These risks and uncertainties include, among other things: shortages or cost increases in power supplies, materials, labor or third-party services (including the direct and indirect effects of Hurricane Katrina on the availability of materials, the cost of natural gas and the demand for oil-field services); weather interference with business operations or project construction; the impact of natural gas price fluctuations; our access to capital to fund additional expansion and our ability to obtain debt or equity financing on satisfactory terms; general economic, market or business conditions; other factors and uncertainties inherent in the storage of natural gas; potential for all or a portion of an acquisition transaction to be challenged; and the uncertainty of successful integration and future performance of assets acquired.
Plains All American Pipeline, L.P. is engaged in interstate and intrastate crude oil transportation, and crude oil gathering, marketing, terminalling and storage, as well as the marketing and storage of liquefied petroleum gas and other petroleum products, in the United States and Canada. The Partnership's common units are traded on the New York Stock Exchange under the symbol "PAA." The Partnership is headquartered in Houston, Texas. Visit Plains All American online at www.paalp.com.
Vulcan Capital is the private investment arm of Vulcan Inc., the project and investment management company founded by Paul G. Allen in 1986 to manage his personal and business initiatives. Focused on generating long-term value appreciation across a multibillion dollar portfolio, Vulcan Capital spans diverse industry sectors and investment asset classes, ranging from early-stage venture investments to public equity value investing, leveraged buyouts, acquisitions, and distressed situations. Visit Vulcan Capital online at capital.vulcan.com.
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