In exchange trade with Kinder Morgan, Cadiz to receive key 96-mile
pipeline route for nominal fee; Cadiz also to receive $10 million
payment upon Kinder regulatory filing
Transaction results in significant financial gain for Company
LOS ANGELES -- (Business Wire)
Today Cadiz Inc. (NASDAQ: CDZI) (“Cadiz,” “the Company”) announced it
has entered into a new agreement with Kinder Morgan, Inc. (NYSE: KMI)
(“Kinder Morgan”) securing the Company’s ownership of a 96-mile natural
gas pipeline linking its holdings in the Cadiz Valley to the northern
and central California water delivery network. The exchange agreement
divides 220 miles of pipeline currently under option to the Company,
with the Company gaining ownership rights to the 96-mile eastern segment
between Barstow and the Cadiz Valley and returning to Kinder Morgan
rights to the 124-mile western segment.
In 2010, Cadiz procured an option to purchase the 220-mile pipeline for
$40 million from El Paso Natural Gas (“EPNG”), which was subsequently
acquired by Kinder Morgan. Kinder Morgan is currently exploring
expansion of its oil and gas transportation network between Texas and
California and desired to purchase back the rights to the western
segment of this line. The consideration that Kinder Morgan has paid
Cadiz for this agreement has been made by way of a reduction in the
purchase price of the 96-mile eastern segment of the pipeline to a
nominal amount of $1 (one dollar). In addition, Kinder Morgan will pay
the Company a further $10 million cash payment at the time it seeks
regulatory approval for use of the western line.
“The agreement promises a quantum improvement in our Water Project’s
versatility. We now have a very real opportunity to interconnect the
Colorado River and northern California sources through the Project. The
conversion of the existing pipeline brings with it the ability to
introduce new high quality surplus supplies for storage at Cadiz at a
monumental savings,” said Company President Scott Slater. “This is pipe
that’s already in the ground, can be used without disturbing the
environment, and terminates near California’s central water delivery
system giving us new access to additional water customers.”
The conversion of the Cadiz-Barstow segment to water transportation will
create significant opportunities for the Company’s Cadiz Valley Water
Conservation, Recovery and Storage Project (“Water Project,” “Project”).
Once converted to water use, the pipeline can be used to directly
connect the project area to northern and central California water
sources during its second phase, serving a growing need for additional
locations for storage south of the Bay Delta region. In addition, the
pipeline would allow Cadiz to deliver water, either directly or via
exchange, to potential customers in San Bernardino and Kern Counties,
areas which do not currently have an interconnection point with the
Project.
Cadiz has evaluated the entire pipeline for its potential to transport
water and has identified the 96-mile eastern portion from the Cadiz
Valley to Barstow as the most critical segment of the line for accessing
the state’s water transportation infrastructure. The Barstow area serves
as a hub for water delivered from northern and central California to
communities in Southern California’s High Desert. Feasibility
assessments and technical analysis indicate that the 30-inch line has
excellent potential to convey approximately 20,000 acre-feet of water
per year to and from points along the route.
The use of the entire 220-mile pipeline by the Project was examined in
the certified Environmental Impact Report as an alternative to the
43-mile route to the Colorado River Aqueduct. The Project would now
incorporate both the 43-mile and 96-mile route, with any groundwater
extractions by either the 43-mile line or the converted Cadiz-Barstow
line conducted in conformity with the Project’s Groundwater Management,
Monitoring and Mitigation Plan approved by the San Bernardino County
Board of Supervisors in October. The use of the two lines would link the
Project to both of the major water delivery systems in Southern
California providing flexible opportunities for both supply and storage.
The Company expects to initiate analysis of potential storage
opportunities for the Project in 2013 as part of the Project’s Phase II
environmental review.
About the Project
The Cadiz Project will provide a new, reliable water supply for
approximately 400,000 Southern Californians by capturing and conserving
groundwater that will otherwise be lost to evaporation from a vast
aquifer system beneath Cadiz Inc. property in California's Mojave
Desert. In its first phase, the Project will deliver up to an average of
50,000 acre-feet per year to Southern California water providers. The
Arizona & California Railroad Company, which owns and operates the
railroad right-of-way to be used by the Project’s proposed water
conveyance pipeline, will also receive water from the Project to serve
railroad purposes. In its second phase, the Project proposes to offer
approximately one million acre-feet of underground aquifer storage to
bank excess supplies without the high rates of evaporative loss suffered
by local surface reservoirs. All Project facilities, including a
wellfield and 43-mile pipeline to the Colorado River Aqueduct, will be
built on private land and avoid desert critical habitat.
About Cadiz Inc.
Founded in 1983, Cadiz Inc. is a publicly-held renewable resources
company that owns 70 square miles of property with significant water
resources and clean energy potential in eastern San Bernardino County,
California. The Company is engaged in a combination of water supply and
storage and organic farming projects. Cadiz abides by a wide-ranging
“Green Compact” focused on environmental conservation and sustainable
management practices at its properties. For more information about
Cadiz, visit www.cadizinc.com.
FORWARD LOOKING STATEMENT: This release contains forward-looking
statements that are subject to significant risks and uncertainties,
including statements related to the future operating and financial
performance of the Company and the financing activities of the Company.Although the Company believes that the expectations reflected in our
forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to be correct.Factors that could
cause actual results or events to differ materially from those reflected
in the Company’s forward-looking statements include the Company’s
ability to maximize value for Cadiz land and water resources, the
Company’s ability to obtain new financing as needed, the receipt of
additional permits for the water project and other factors and
considerations detailed in the Company’s Securities and Exchange
Commission filings.
Contacts:
Cadiz Inc.
Courtney Degener, 213-271-1600
Source: Cadiz Inc.
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