In troubled energy sector El Paso Energy Partners remains "copacetic"

By Paul A. Harris

St. Louis, Mo., May 15 - In an energy sector roiled by investor worries that companies are using bookkeeping strategies devised by Three-Card Monty John, midstream natural gas transporter El Paso Energy Partners proffers a "copacetic" balance sheet to investors, according to Sandra M. Ryan, the company's director of investor relations.

"Even though our balance sheet is comparable to some investment grade vehicles, right now - with the rating agencies feeling as they do about energy in general - our high yield folks love us since we've got one of the strongest balance sheets out there, as far as the high yield goes," Ryan told Prospect News on Wednesday.

El Paso Energy Partners priced an upsized drive-by deal on Tuesday, raising the offering to $230 million from $200 million and pricing the add-on to its 8½% senior subordinated notes due June 1, 2011 (B1/BB-) at 102 with a yield to worst of 8.139%. Credit Suisse First Boston was the bookrunner.

The money, Ryan said, will be used along with $150 million in proceeds from the company's April 26 equity offering to finance acquisitions including assets of Texas Intrastate Pipeline, some gathering systems including Permian Basin gathering systems, part of a non-operated interest in a gas processing facility and a storage facility in Texas.

"Our strategy, when we make an acquisition, is that we fund it 50% debt-50% equity," Ryan said. "In doing so we keep our balance sheet copacetic with where it was prior to the acquisition."

When Prospect News pointed out that although the energy sector indeed contains names that at present have some volatility attached to them, oil and gas companies have been making out famously in the primary market with tight pricings, Ryan conceded that she knew this to be the case.

However, she said, the recent tight pricings of some oil and gas exploration and production companies had little to do with El Paso Energy Partners' timing in coming to the high yield market.

"We would probably be out there anyway but we're very happy to take advantage of the current markets."

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