An agreement to combine OGE Energy's Enogex midstream business with Energy Transfer Partners LP's pipeline operations has been terminated because of uncertain capital markets.

The agreement was announced in September by Oklahoma City-based OGE Energy and Dallas-based Energy Transfer Partners.

The joint venture formed by the agreement would have operated the combined midstream and interstate natural gas pipelines owned by OGE Energy's Enogex subsidiary and Energy Transfer's interstate assets and gathering operations.

The agreement was terminated after the economic downturn and resulting capital market uncertainty reduced the economic feasibility of the project.

"We believe strongly in the strategic merits of the ETP Enogex joint venture, but conditions in the financial markets are such that any partnership completed in the near term would not likely be economically beneficial to OGE," said Pete Delaney, OGE chairman, president and CEO. "While we intend to revisit the possibility of a partnership again when conditions are more favorable, both companies remain well-positioned to move forward with their business plans."

In New York Stock Exchange trading Thursday, OGE Energy fell 11 cents to $24.53. The termination of the agreement was announced after markets closed Thursday. Energy Transfer Partners closed up 87 cents, or 2.53 percent, at $35.22 in NYSE trading.

OGE and Energy Transfer Partners had set a March 31 deadline to complete formation of the joint venture. All of OGE's ownership in Enogex would have been merged into the proposed ETP Enogex Partners.

Enogex's net income for the third quarter totaled $28 million, up from $20 million for the third quarter of 2007. Natural gas pipeline operating revenues for the quarter totaled $571.8 million, up from $411.3 million for the third quarter of 2007.

"We regret that the capital markets have prevented us from accomplishing our plans to combine these businesses in a strategic joint venture," said Kelcy Warren, Energy Partners chairman and CEO. "We have developed a good relationship with, and have a great amount of respect for, the management of OGE, and we look forward to pursuing other opportunities with OGE in the future."

Originally published by David Page.

(c) 2009 Journal Record - Oklahoma City. Provided by ProQuest LLC. All rights Reserved.

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