Reuters: Deals: South Korea in talks for cut of El Paso assets: source

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South Korea in talks for cut of El Paso assets: source Mar 19th 2012, 18:22 By Cho Mee-young and Greg Roumeliotis SEOUL/NEW YORK | Mon Mar 19, 2012 2:22pm EDT SEOUL/NEW YORK (Reuters) - South Korean state oil company Korea National Oil Corp KOILC.UL is in talks to join a private equity-led consortium that has agreed to buy El Paso Corp's (EP.N) oil and natural gas assets for $7.15 billion, a source with direct knowledge of the matter said on Monday. KNOC is negotiating to participate alongside Apollo Global Management LLC (APO.N), Riverstone Holdings LLC and billionaire Len Blavatnik's Access Industries as a minority investor in the exploration and production assets, the source said, on condition of anonymity. Spokespeople for KNOC, El Paso, Apollo, Riverstone and Access Industries declined to comment. Kinder Morgan Inc (KMI.N) is selling off the business, which it would have picked up as part of its $21 billion deal to buy rival El Paso late last year. Because Kinder Morgan was only interested in El Paso's pipeline assets, it promptly put the exploration and production business up for sale, hoping to use the proceeds to reduce the cost of the original deal. Foreign companies, encouraged by high crude oil prices and hungry for exploration know-how, have been on the hunt for shale formations across the United States. South Korea depends almost entirely on oil imports; it is the world's fifth-largest crude importer and second-largest liquefied natural gas buyer and has been looking for ways to boost its energy supplies. KNOC said in December it aimed to invest between $3 billion and $4 billion in 2012 to acquire overseas oil assets and beef up daily oil production. With the acquisition of oil assets, it aims to take its daily production to 300,000 barrels by the end of 2012. KNOC's deals in the U.S. last year include the acquisition of one-third of Anadarko Petroleum Corp's (APC.N) interest in the Eagle Ford shale for $1.55 billion and a 10 percent stake in U.S. oil and gas company Parallel Petroleum. As private equity firms pile in on the U.S. energy sector, they are increasingly turning to Asian oil and gas firms eager to diversify revenues for contributions to the funds they need to clinch deals in the sector. Last year KKR & Co LP (KKR.N) partnered with Japanese trading house Itochu Corp (8001.T), which agreed to invest $1 billion to take a 25 percent stake in U.S. oil and gas group Samson Investment Co, which KKR's consortium bought for $7.2 billion. In seeking to bring KNOC on board, Apollo is leveraging its relationship with the South Korean company following its divestment of Parallel to Samsung C&T Corp (000830.KS) and KNOC in November for $772 million. (Reporting by Greg Roumeliotis and Michael Erman in New York and Cho Mee-young in Seoul; Additional reporting by Anna Driver in Houston; Editing by Lisa Von Ahn and Gerald E. McCormick) Link this Share this Digg this Email Reprints

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