Kinder Morgan To Assume St. Johns Dome Assets

To buy rights, title and interest in St Johns dome and certain related assets in Apache County, AZ & Catron County, N.M., gaining helium & CO2 assets in 250,174-acre St. Johns Field.

Kinder Morgan CO2 Co. LP, a subsidiary of Kinder Morgan Energy Partners LP, Houston, (NYSE: KMP) plans to acquire the rights, title and interest in the St Johns dome and certain related assets in Arizona and New Mexico from Ridgeway Arizona Oil Corp., a subsidiary of Enhanced Oil Resources Inc., Houston, (Toronto Venture: EOR) for $30 million.

The assets are in Apache County, Arizona, and Catron County, New Mexico and include helium and CO2 assets St. Johns Field, a 250,174-acre exploration and evaluation project.

Kinder Morgan has agreed to amend the CO2 gas sale and purchase agreement with Enhanced Oil, modifying the dates of pipeline connection and the date of first deliveries and eliminating the termination fee.

Enhanced Oil president and chief executive Barry Lasker says, “The monetization of St Johns is an important step forward for the Company and will enable an acceleration of our infill oil development and exploitation program within our 27,000 acres of San Andres leases in New Mexico . Ultimately, we anticipate that the cash proceeds and other consideration provided from this sale will help finance our planned CO2 flood at the 5,000 acre Milnesand field and potentially at the adjacent 20,000 acre Chaveroo field. While St Johns offered tremendous long-term potential for the right company, the capital financing risks including our cost of capital and continuing associated carrying costs were considered to be too onerous on a company of our size. The opportunities for oil reserve growth in today's environment both in our San Andres infill projects, our CO2 flood opportunities and other new venture developments are too compelling not to be our immediate focus.”

SunTrust Robinson Humphrey Inc. is financial advisor to Enhanced Oil.

The deal is expected to close Dec. 1.