Kinder Morgan buys Bakken assets from Hamm

OREANDA-NEWS. Kinder Morgan will buy Bakken pipeline company Hiland Partners from founder and Continental Resources chief executive Harold Hamm for \$3bn, including debt.

The purchase builds a foundation for Kinder Morgan in the Bakken and comes with expansion potential, said chief executive Rich Kinder today on the company's quarterly call.

"Think of what we're doing as building a spider web that we will continue to expand over the coming months and years," Kinder said.

Hiland's gathering systems cover drilling acreage under long-term gathering agreements in what Kinder called "some of the most attractive and economically viable areas of the basin." Those long-term agreements could help shield those assets from the recent 50pc drop in crude prices and a pullback in Bakken drilling. The company said it is incorporating drilling activity cutbacks announced by Bakken producers into its projections for Hiland's performance.

Hiland holds about 1,225 miles of crude gathering pipelines that serve more than 1.8mn acres and reach major takeaway pipes and rail terminals, as well as gas pipeline and processing systems primarily in the Bakken of North Dakota and Montana. Continental the largest single Hiland customer, has the majority of its Bakken acreage under long-term gathering agreements with Hiland. Other customers include Oasis Petroleum, ExxonMobil's XTO Energy, Whiting Petroleum and Hess.

Hiland's 84,000 b/d Double H pipeline is expected to go into full service by the end of this month, connecting Hiland's Dore terminal in North Dakota to Baker, Montana, and Guernsey, Wyoming. The line can connect to Tallgrass Energy Partners' Pony Express pipeline to Cushing, Oklahoma. The line is set to be expanded to 108,000 b/d in 2016 and has firm take-or-pay contracts for about 60,000 b/d.

Hiland's gas gathering and processing systems in North Dakota and Montana consist of about 1,800 miles of gathering pipelines and, upon completion of a plant expansion in 2015, 240mn ft?/d of gas processing capacity and 30,000 b/d of fractionation capacity. Its systems process associated gas from oil production and have approximately 3.7mn acres dedicated under long-term agreements with major Bakken oil producers. Hiland's midcontinent systems also gather and process gas in the Woodford shale and other areas of Oklahoma.