Petroleum Company Mergers and Acquisitions

Written By Brianna Panzica

Posted October 25, 2011

Several petroleum-related acquisitions have been heating up the market and recent news.

Kinder Morgan Energy Partners (NYSE: KMP) made headlines on Monday with its announcement that it will purchase SouthTex Treaters, a company specializing in natural gas treatment plants, for $155 million.

The treatment plants designed by SouthTex, Market Watch reports, remove carbon dioxide and hydrogen sulfide from the natural gas.

Kinder Morgan Energy currently specializes in operating pipelines, and the company is looking forward to this acquisition that will allow it to become more involved in the natural gas industry and particularly the treatment of the product.

Bill Stokes, vice president of Kinder Morgan Treating, expressed the company’s plans to the Wall Street Journal:

“The acquisition will enable us to provide large amine plants for centralized treating facilities which are often needed in the rapidly developing shale plays.  We will also be able to replenish our already large inventory of amine plants and offer our customers even more flexibility for their treating needs.”

Kinder Morgan Energy was up 1.2% in afternoon trading to $77.41.  As Market Watch reports, the company saw a 33% drop in third quarter profits due to certain legal issues.  This acquisition could be a step up.

General Electric (NYSE: GE) is also making a move for liquid fuels, and on Monday the company reported that it has entered into a partnership with Lightfoot Capital Partners.

GE purchased a 58% stake in the company, which operates terminals for petroleum products.

Lightfoot, according to the Wall Street Journal, is partners with Arc Terminals, a company that has 3.6 million barrels of storage potential.

GE is hoping to expand its position in the petroleum terminal industry, and this acquisition will help it do so.

In afternoon trading, GE was up .95% to $16.47.

Less amicable is Plains All American Pipeline’s (NYSE: PAA) attempt to take over SemGroup Corp (NYSE: SEMG).

As Market Watch reports, Plains had tried several times to win over SemGroup with bids, but SemGroup rejected each offer, including a $24-per-share bid, totaling $1 billion, earlier this month.

CEO of Plains, Greg L. Armstrong, expressed his discontent in a letter, as reported by Market Watch:

“We are disappointed that SemGroup’s board of directors has refused to engage in constructive discussions with us regarding a possible transaction.”

The article reports that Plains started its bidding over a year ago, in March of 2010.  The rival companies are still at odds and cannot reach an agreement on the issue.

Shares of SemGroup were up 16.9% in afternoon trading to $27.55 per share. Plains was also up 1.6% to $64.93 per share.

That’s all for now,


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