CenterPoint Energy 2009 Annual Report Download - page 64

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42
Gas Operations also suffered some damage to its system in Houston, Texas and in other portions of its service
territory across Texas and Louisiana. As of December 31, 2009, Gas Operations has deferred approximately
$3 million of costs related to Hurricane Ike for recovery as part of future natural gas distribution rate proceedings.
Long-Term Gas Gathering and Treatment Agreements
In September 2009, CenterPoint Energy Field Services, Inc. (CEFS), a wholly-owned natural gas gathering and
treating subsidiary of CERC Corp., entered into long-term agreements with an indirect wholly-owned subsidiary of
EnCana Corporation (EnCana) and an indirect wholly-owned subsidiary of Royal Dutch Shell plc (Shell) to provide
gathering and treating services for their natural gas production from certain Haynesville Shale and Bossier Shale
formations in Louisiana. CEFS also acquired jointly-owned gathering facilities from EnCana and Shell in De Soto
and Red River parishes in northwest Louisiana. Each of the agreements includes acreage dedication and volume
commitments for which CEFS has rights to gather Shell’s and EnCana’s natural gas production from the dedicated
areas.
In connection with the agreements, CEFS commenced gathering and treating services utilizing the acquired
facilities. CEFS is expanding the acquired facilities in order to gather and treat up to 700 million cubic feet (MMcf)
per day of natural gas. If EnCana or Shell elect, CEFS will further expand the facilities in order to gather and treat
additional future volumes. The construction necessary to reach the contractual capacity of 700 MMcf per day
includes more than 200 miles of gathering lines, nearly 25,500 horsepower of compression and over 800 MMcf per
day of treating capacity.
CEFS estimates that the purchase of existing facilities and construction to gather 700 MMcf per day will cost up
to $325 million. If EnCana and Shell elect expansion of the project to gather and process additional future volumes
of up to 1 Bcf per day, CEFS estimates that the expansion would cost as much as an additional $300 million and
EnCana and Shell would provide incremental volume commitments. Funds for construction are being provided from
anticipated cash flows from operations, lines of credit or proceeds from the sale of debt or equity securities. As of
December 31, 2009, $176 million had been spent on the project, including the purchase of existing facilities.
Debt Financing Transactions
In January 2009, CenterPoint Houston issued $500 million aggregate principal amount of general mortgage bonds
due in March 2014 with an interest rate of 7.00%. The proceeds from the sale of the bonds were used for general
corporate purposes, including the repayment of outstanding borrowings under CenterPoint Houston’s revolving
credit facility and the money pool, capital expenditures and storm restoration costs associated with Hurricane Ike.
In August 2009, Southeast Supply Header, LLC (SESH) closed on a private debt offering in the amount of $375
million. Also during 2009, CERC Corp. made a capital contribution to SESH in the amount of $137 million. Using
$186 million of its proceeds from the debt offering and the capital contribution, SESH repaid the note receivable it
owed to CERC Corp., which note had a principal balance of $323 million at the time of the repayment. CERC Corp.
used the proceeds to repay borrowings under its credit facility.
In October 2009, CenterPoint Houston terminated its $600 million 364-day secured credit facility which had been
arranged in November 2008 following Hurricane Ike.
In October 2009, the size of CERC Corp.’s revolving credit facility was reduced from $950 million to
$915 million through removal of Lehman Brothers Bank, FSB (Lehman) as a lender. Prior to its removal, Lehman
had a $35 million commitment to lend. All credit facility loans to CERC Corp. that were funded by Lehman were
repaid in September 2009.
In October 2009, CERC amended its receivables facility to extend the termination date to October 8, 2010.
Availability under CERC’s 364-day receivables facility ranges from $150 million to $375 million, reflecting
seasonal changes in receivables balances.
In January 2010, we purchased $290 million principal amount of pollution control bonds issued on our behalf at
101% of their principal amount plus accrued interest pursuant to the mandatory tender provisions of the bonds.