Empire State acquired for $240 million
7 Oct 2002
The US-based National Fuel Gas Company has reached an agreement to acquire the Empire State Pipeline from a subsidiary of Duke Energy in a stock purchase agreement.
Empire is a 24-inch diameter natural gas transmission pipeline that originates at the US/Canada border at the Chippawa Channel of the Niagara River, and extends easterly 157 miles from Buffalo, NY to near Syracuse, NY.
Constructed in 1992 and in service since 1993, Empire delivers natural gas supplies to major industrial companies, utilities (including National Fuel's utility segment) and power producers. With a design capacity of 525 million cubic feet per day (MMcf/d), Empire currently has firm contracts for almost all of its capacity.
Empire was included in Duke Energy's $8 billion acquisition of Westcoast Energy and its mostly Canadian natural gas-related assets in March 2002. The New York intrastate pipeline has been managed by Duke Energy Gas Transmission (DEGT) since that time.
The transaction is valued at approximately $240 million, which includes approximately $60 million in assumed debt. Pursuant to the stock purchase agreement, National Fuel will acquire all of the outstanding shares of Empire State Pipeline Company and the St. Clair Pipeline Company, each of which owns a 50% interest in Empire.
The transaction is subject to a number of conditions, including certain regulatory approvals. The companies expect to close the deal in December 2002 or during the first quarter of calendar 2003.
As a result of this acquisition, National Fuel expects a near-term 2% to 3% dilutive effect to earnings per share.
