UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT TO
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report March 5, 1998
KINDER MORGAN ENERGY PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-11234 76-0380342
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification)
1301 McKinney Street, Ste. 3450, Houston, Texas 77010
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 713-844-9500
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Item 2. Acquisition or Disposition of Assets.
Acquisition of Santa Fe Pacific Pipelines, L.P.
On March 6, 1998, Kinder Morgan Operating L.P. "D" ("OLP-D")
acquired 99% of SFPP, L.P., the operating partnership of Santa Fe
Pacific Pipeline Partners, L.P. ("Santa Fe"). SFPP, L.P. owned
substantially all of Santa Fe's assets and conducted all of its
business activities. The Partnership acquired the interest of
Santa Fe's common unit holders in SFPP, L.P. in exchange for 26.6
million Common Units (1.39 Common Units for each Santa Fe common
unit). The Partnership paid $84.4 million to Santa Fe Pacific
Pipelines, Inc. (the "SF General Partner") in exchange for the
general partner interest in Santa Fe.
Also on March 6, 1998, SFPP, L.P. redeemed from the SF General Partner a
.5% interest in SFPP, L.P. for $5.8 million. The redemption was paid from SFPP,
L.P.'s cash reserves. After the redemption, the SF General Partner continues to
own a .5% special limited partner interest in SFPP, L.P. and OLP-D owns a 99.5%
general partner interest in SFPP, L.P. The Partnership owns a 99% limited
partner interest in OLP-D and the general partner of the Partnership owns a 1%
general partner interest in OLP-D.
The Partnership and a special committee of independent directors of the SF
General Partner determined the purchase price for Santa Fe (including the
exchange ratio for the Santa Fe common units) through negotiations. The
Partnership financed the purchase of the Santa Fe general partner interest
through its syndicated credit facility with First Union National Bank, as
administrative agent, swingline lender and issuing bank, Goldman Sachs Credit
Partners, as syndication agent, and the other lenders that are parties to the
credit facility.
At the time of the acquisition, Santa Fe was one of the largest
independent refined petroleum products pipelines in the United States serving,
six Western states with approximately 3,300 miles of common carrier pipeline and
thirteen truck loading terminals.
Formation of Shell CO2 Company
On March 5, 1998, the Partnership and affiliates of Shell Oil Company
("Shell") formed Shell CO2 Company, Ltd. ("Shell CO2"), which will explore,
produce, market and transport CO2 for enhanced oil recovery onshore throughout
the continental United States. The Partnership received a 20% limited partner
interest in Shell CO2 in exchange for contributing its Central Basin Pipeline
and $25 million in cash. Affiliates of Shell contributed their interests in CO2
reserves, pipelines, and other related assets in exchange for an 80% interest in
Shell CO2.
An affiliate of Shell will be the general partner of Shell CO2 and will
manage its operations.
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The Partnership is entitled, if there is sufficient available cash from
operations, to a fixed quarterly distribution of approximately $3.6 million
($14.5 million per year) during the four-year period ended December 31, 2001. In
2002 and 2003, the Partnership's cash distributions will be increased or
decreased so that the total cash distributions during the first six years of
Shell CO2's existence will be equal to the Partnership's percentage interest of
the cumulative cash distributions of Shell CO2 during such period on a
present-value basis (discounted at 10%).
At any time after March 5, 2002, Shell has the right to purchase the
Partnership's interest in Shell CO2 and the Partnership has the right to require
Shell to purchase the Partnership's interest in Shell CO2. The purchase price
for the Partnership's interest in Shell CO2 will be at a discount from fair
value in the event the Partnership exercises its put option, and at a premium
over fair value in the event Shell exercises its call option. The amount of the
discount or premium declines during the period from March 5, 2003 through March
5, 2006 and is thereafter fixed at a 5% discount/premium. If the parties are
unable to agree to the fair value of the Partnership's interest in Shell CO2,
then the Partnership and Shell will use an agreed-upon appraisal methodology to
determine fair value.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The financial statements of Santa Fe Pacific Pipelines, L.P. as of
December 31, 1996 and 1997 and for each of the three years in the period
ended December 31, 1997 are not included herein and will be filed by
amendment on or before April 3, 1998.
(b) Pro forma financial information.
The pro forma financial statements of Kinder Morgan Energy Partners, L.P.
giving effect to the acquisition of Santa Fe Pacific Pipelines, L.P. and
the formation of Shell CO2 Company as of December 31, 1997 and for the
year ended December 31, 1997 are not included herein and will be filed by
amendment on or before April 3, 1998.
(c) Exhibits.
* Exhibit 2.1 Purchase Agreement dated October 18, 1997
between Kinder Morgan Energy Partners, L.P.,
Kinder Morgan G.P., Inc., Santa Fe Pacific
Pipeline Partners, L.P., Santa Fe Pacific
Pipelines, Inc. and SFP Pipeline Holdings, Inc.
(Exhibit 2 to Amendment No. 1 to the
Partnership's Registration Statement on Form S-4
(File No. 333-44519) filed February 4, 1998).
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**Exhibit 2.2 Master Agreement dated as of January 1, 1998 among Shell
Western E&P Inc., Shell Western Pipelines Inc., Shell Cortez
Pipeline Company, Shell CO2, LLC, Shell CO2 General LLC, Shell
Land & Energy Company, Kinder Morgan Operating L.P. "A" and
Kinder Morgan CO2, LLC
**Exhibit 2.3 First Amended and Restated Agreement of Limited Partnership
dated as of March 5, 1998, by and between Shell CO2 General
LLC, Kinder Morgan CO2, LLC and Shell CO2, LLC.
**Exhibit 2.4 Assumption and Indemnification Agreement dated as of
January 1, 1998 among Shell CO2 General LLC, Shell CO2, LLC,
Shell Western E&P Inc., Shell Western Pipelines Inc., Shell
Cortez Pipeline Company, Shell Land & Energy Company, Kinder
Morgan CO2, LLC, Kinder Morgan Operating L.P. "A" and Shell
CO2 Company, Ltd.
**Exhibit 2.5 Guaranty and Indemnification Agreement dated as of January 1,
1998 between Shell Western E&P Inc. and Kinder Morgan Energy
Partners, L.P.
***Exhibit 23.1 Consent of Price Waterhouse LLP
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*Incorporated by reference.
**Filed with this report.
***To be filed by amendment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
KINDER MORGAN ENERGY PARTNERS, L.P.
By: Kinder Morgan G.P., Inc.,
Its general partner
By: /s/ Clare H. Doyle
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Name: Clare H. Doyle
Title: Vice President
Date: March 31, 1998
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