OG&E 2013 Annual Report Download - page 55

a 24.95 percent interest in Southeast Supply Header, LLC, a Delaware
limited liability company. CenterPoint indirectly owned a 50 percent
interest in Southeast Supply Header, LLC, which owns a 1.0 billion
cubic feet per day, 274-mile interstate pipeline that runs from the
Perryville Hub in Louisiana to Coden, Alabama.
Immediately prior to closing, on May 1, 2013, the ArcLight group
contributed $107.0 million and OGE Energy contributed $9.1 million to
Enogex LLC in order to pay down short-term debt. At December 31,
2013, OGE Energy, through its wholly owned subsidiary OGE Holdings,
holds 28.5 percent of the limited partner interests in Enable.
CenterPoint has certain put rights, and Enable has certain call
rights, exercisable with respect to any interest in Southeast Supply
Header, LLC retained by CenterPoint following the formation of Enable
Midstream Partners, under which CenterPoint would contribute to
Enable Midstream Partners CenterPoint’s retained interest in Southeast
Supply Header, LLC at a price equal to the fair market value of such
interest at the time the put right or call right is exercised. If CenterPoint
were to exercise such put right or Enable were to exercise such call
right, CenterPoint’s retained interest in Southeast Supply Header, LLC
would be contributed to Enable in exchange for consideration consist-
ing of a specified number of limited partnership units and, subject to
certain restrictions, a cash payment, payable either from CenterPoint
to Enable or from Enable to CenterPoint, in an amount such that the
total consideration exchanged is equal in value to the fair market value
of the contributed interest in Southeast Supply Header, LLC.
The general partner of Enable is equally controlled by CenterPoint
and OGE Energy, who each have 50 percent of the management rights.
CenterPoint and OGE Energy also own a 40 percent and 60 percent
interest, respectively, in any incentive distribution rights to be held by
the general partner of Enable following an initial public offering of Enable.
In addition, for a period of time, the ArcLight group will have certain
protective rights and approval rights over certain material activities of
Enable, including material increases in capital expenditures and certain
equity issuances, entering into transactions with related parties and
acquiring, pledging or disposing of certain material assets. The general
partner of Enable will initially be governed by a board made up of an equal
number of representatives designated by each of CenterPoint Energy,
Inc. and OGE Energy. Based on the 50/50 management ownership, with
neither company having control, effective May 1, 2013, OGE Energy
deconsolidated its interest in Enogex Holdings LLC and began account-
ing for its interest in Enable using the equity method of accounting.
Pursuant to a Registration Rights Agreement dated as of May 1,
2013, OGE Energy and CenterPoint Energy, Inc. agreed to initiate the
process for the sale of an equity interest in Enable in an initial public
offering. Enable filed a registration statement for the initial public offer-
ing on November 26, 2013 and, subject to limited exceptions, plans to
consummate the initial public offering during the first quarter of 2014.
The initial public offering is subject to market conditions and OGE
Energy can give no assurances that the initial public offering will be
consummated.
Effective May 1, 2013, Enable entered into a $1.4 billion, five-year
senior unsecured revolving credit facility in accordance with the terms
of the Master Formation Agreement and Enogex LLC’s $400.0 million
revolving credit facility was terminated.
Subject to the exceptions provided below, pursuant to the terms of
an Omnibus Agreement dated as of May 1, 2013 among OGE Energy, the
ArcLight group and CenterPoint Energy, Inc., each of OGE Energy and
CenterPoint Energy, Inc. will be required to hold or otherwise conduct all
of its respective Midstream Operations (as defined below) located within
the United States in Enable. This restriction will cease to apply to both
OGE Energy and CenterPoint Energy, Inc. as soon as either OGE Energy
or CenterPoint Energy, Inc. ceases to hold (i) any interest in the general
partner of Enable or (ii) at least 20 percent of the limited partner interests
of Enable. “Midstream Operations” generally means, subject to certain
exceptions, the gathering, compression, treatment, processing, blending,
transportation, storage, isomerization and fractionation of crude oil and
natural gas, its associated production water and enhanced recovery
materials such as carbon dioxide, and its respective constituents and
the following products: methane, NGLs (Y-grade, ethane, propane, nor-
mal butane, isobutane and natural gasoline), condensate, and refined
products and distillates (gasoline, refined product blendstocks, olefins,
naphtha, aviation fuels, diesel, heating oil, kerosene, jet fuels, fuel oil,
residual fuel oil, heavy oil, bunker fuel, cokes, and asphalts), to the extent
such activities are located within the United States.
In addition, if OGE Energy or CenterPoint Energy, Inc. acquires any
assets or equity of any person engaged in Midstream Operations with
a value in excess of $50 million (or $100 million in the aggregate with
such party’s other acquired Midstream Operations that have not been
offered to Enable), the acquiring party will be required to offer Enable
the opportunity to acquire such assets or equity for such value; pro-
vided, that the acquiring party will not be obligated to offer any such
assets or equity to Enable if the acquiring party intends to cease using
them in Midstream Operations within 12 months. If Enable does not
exercise its option, then the acquiring party will be free to retain and
operate such Midstream Operations; provided, however, that if the fair
market value of such Midstream Operations is greater than 662⁄3percent
of the fair market value of all of the assets being acquired in such trans-
action, then the acquiring party will be required to dispose of such
Midstream Operations within 24 months.
As long as the ArcLight group has certain protective rights,
the ArcLight group will be prohibited from pursuing any transaction
independently from Enable (i) if the ArcLight group’s consent is required
for Enable to pursue such transaction and (ii) the ArcLight group affir-
matively votes not to consent to such transaction.
On May 1, 2013, OGE Energy, OGE Holdings and Enable entered into
a Seconding Agreement. During the term of the Seconding Agreement,
OGE Holdings’ employees will continue to perform services for Enable
and its subsidiaries.
Distributions received from Enable were $51.7 million during the
year ended December 31, 2013.
OGE Energy Corp. 49