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Enterprise Announces Acquisition of Natural Gas Gathering Assets in South Texas

HOUSTON--(BUSINESS WIRE)--July 12, 2006--Enterprise Products Partners L.P. (NYSE:EPD) announced today it has acquired certain natural gas gathering systems and related gathering and processing contracts from Cerrito Gathering Company, Ltd. an affiliate of Lewis Energy Group, L.P. headquartered in San Antonio, Texas. The total consideration paid of $325 million was comprised of $146.2 million in cash and approximately 7.1 million Enterprise common units. This acquisition is expected to be immediately accretive to distributable cash flow per unit for our limited partners.

The Cerrito gathering systems ("Cerrito"), located near Laredo in South Texas, are comprised of approximately 484 miles of pipeline (including approximately 172 miles of pipe currently under lease from Enterprise) and 31,000 horsepower compression, and are connected to over 1,450 wells with an aggregate volume of over 100 million cubic feet per day ("MMcf/d) of rich natural gas sourced from the Olmos and Wilcox Trends in South Texas. Volumes currently gathered by the Cerrito systems are delivered into Enterprise's South Texas pipeline infrastructure.

These gathering systems will be supported by a long-term dedication from Lewis Energy Group for their production from the Olmos formation which accounts for approximately 45% of current rich gas production and existing contracts with third party producers which comprise approximately 55% of current throughput. Lewis Energy Group has approximately 335,000 acres of land for development in the area with plans to drill 130 new wells in 2006 and up to 1,000 new wells in the future. Cerrito has experienced significant growth in recent years with volumes increasing by more than 30 percent in 2005 compared to 2004, and by 91 percent since 2002. In addition to the natural gas gathering and processing dedication, the transaction also includes a long-term dedication to transport lean gas gathered and treated at Lewis's Big Reef Treating facility. The Big Reef facility will gather and treat growing sour gas production from the southern portion of the Edwards Trend of South Texas. Current volumes are approximately 20 MMcf/d with the potential to grow to 75 MMcf/d over the next few years.

In addition to Lewis Energy Group, there are over 35 small to large exploration companies that have active development programs in the area with future rich-gas production growth expected from the Olmos, Wilcox, Austin Chalk and other deeper potentially productive horizons. Lewis Energy Group has also made a long-term dedication of their future potential production from any of these deeper production horizons to the newly acquired system. In total, it is estimated that there is approximately 1.5 trillion cubic feet of recoverable natural gas reserves in the regions served by the Cerrito gathering systems.

"The addition of the Cerrito gas gathering systems will extend our integrated energy value chain in South Texas and broaden our extensive natural gas franchise in Texas while allowing us to provide quality energy solutions for our customers," said Robert G. Phillips, Enterprise's President and Chief Executive Officer. "The Cerrito gathering systems are well-managed, high-quality assets that generate stable, fee-based cash flows with low maintenance capital expenditure requirements. Importantly, the consolidation of the Cerrito assets with our existing system ensures a continuing and growing supply of rich natural gas production for our Texas processing plants and natural gas liquids for our liquids pipelines and fractionators, and provides another long-term source of expansion opportunities as producers develop the hydrocarbon resources in this attractive area."

Enterprise has the largest natural gas pipeline system in Texas with over 8,200 miles of pipe that access major supply basins in north Texas (Barnett Shale), east Texas (Bossier), south Texas (Wilcox and Vicksburg) and west Texas (Permian). It is also connected to all major Texas markets including the cities of San Antonio, Austin, Dallas Fort Worth, Beaumont, Corpus Christi, Houston and the Houston Ship Channel area, as well as 19 natural gas-fired power plants. Enterprise has 10 natural gas processing plants in Texas with the capacity to process two billion cubic feet per day of natural gas.

Enterprise Products Partners L.P. is one of the largest publicly traded energy partnerships with an enterprise value of approximately $15 billion, and is a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs and crude oil. Enterprise transports natural gas, NGLs and crude oil through approximately 33,100 miles of onshore and offshore pipelines and is an industry leader in the development of midstream infrastructure in the United States and the Gulf of Mexico. Services include natural gas transportation, gathering, processing and storage; NGL fractionation (or separation), transportation, storage, and import and export terminaling; crude oil transportation and offshore production platform services. For more information, visit Enterprise on the web at Enterprise Products Partners L.P. is managed by its general partner, Enterprise Products GP LLC, which is wholly owned by Enterprise GP Holdings L.P. (NYSE:EPE). For more information on Enterprise GP Holdings L.P., visit its website at

This press release contains various forward-looking statements and information that are based on Enterprise's beliefs and those of its general partner, as well as assumptions made by and information currently available to Enterprise. When used in this press release, words such as "anticipate," "project," "expect," "plan," "goal," "forecast," "intend," "could," "believe," "may," and similar expressions and statements regarding the plans and objectives of Enterprise for future operations, are intended to identify forward-looking statements. Although Enterprise and its general partner believe that such expectations reflected in such forward-looking statements are reasonable, neither Enterprise nor its general partner can give assurances that such expectations will prove to be correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, Enterprise's actual results may vary materially from those Enterprise anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on Enterprise's results of operations and financial condition are:

-- fluctuations in oil, natural gas and NGL prices and production due to weather and other natural and economic forces;

-- a reduction in demand for its products by the petrochemical, refining or heating industries;

-- the effects of its debt level on its future financial and operating flexibility;

-- a decline in the volumes of NGLs delivered by its facilities;

-- the failure of its credit risk management efforts to adequately protect it against customer non-payment;

-- terrorist attacks aimed at its facilities; and

-- the failure to successfully integrate its operations with assets or companies, if any that it may acquire in the future.

Enterprise has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

CONTACT: Enterprise Products Partners L.P., Houston
Randy Burkhalter, 713-381-6812

SOURCE: Enterprise Products Partners L.P.

K-1 Tax Information

The Enterprise Products Partners L.P. (EPD) 2018 tax packages are currently available online. The mailing of the tax packages will be completed by February 28, 2019.

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