DUKE ENERGY COMPLETES RESTRUCTURING OF DEFS OWNERSHIP INTEREST - Duke Energy

News Release
July 11, 2005

DUKE ENERGY COMPLETES RESTRUCTURING OF DEFS OWNERSHIP INTEREST

CHARLOTTE, N.C. – Duke Energy has completed a restructuring of the company’s ownership interest in Duke Energy Field Services LLC (DEFS).

As part of the restructuring, announced in February, Duke Energy transferred 19.7 percent of its ownership interest in DEFS to ConocoPhillips, Duke Energy’s partner in the joint-venture. The restructuring creates an equal 50-percent share in DEFS for both companies.

Duke Energy received directly and indirectly through its ownership interest in DEFS approximately $1.1 billion in cash and assets from ConocoPhillips. The transaction includes the transfer of DEFS’ Canadian assets to Duke Energy Gas Transmission (DEGT). The DEFS Canadian business consists of natural gas gathering and processing facilities in Alberta and British Columbia.

The transfer of ConocoPhillips’ interest in the Empress System to Duke Energy, originally envisioned as part of the transaction, has been delayed pending damage repairs to the asset from a recent windstorm. In lieu of the Empress facilities in western Canada, Duke received the equivalent value in cash.

“We believe a 50-50 joint venture between the two parent companies is a better fit than an uneven ownership split,” said Paul Anderson, Duke Energy chairman of the board and chief executive officer. “And with such a strong price environment, we felt the time was right to monetize a portion of the DEFS business.

“Duke Energy remains committed to our partnership with ConocoPhillips, and to preserving DEFS’ industry-leading performance, strong financial position and investment-grade ratings,” Anderson said.

“Given the strong support from our parent companies, we are excited about future growth opportunities at DEFS, including the possible formation of a new master limited partnership,” said William Easter III, chairman, president and chief executive officer of DEFS.

Duke Energy Field Services (DEFS) is a premier North American midstream energy company that leads or is among the nation’s leaders in the gathering, compression, treating and processing of natural gas; and fractionation, transportation, marketing and trading of NGLs. Other services include the transportation, marketing and storage of natural gas. DEFS operates in 16 states. The Denver-based company owns or operates 57 plants and 58,000 miles of pipeline. Current handled volumes are 6.8 TBtu/d of natural gas and 356,000 Bbls/d of NGLs. 

DEFS was formed by combining the Duke Energy and ConocoPhillips natural gas gathering and processing businesses. The partnership is a 50-50 joint venture between Duke Energy and ConocoPhillips.   

Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in the Americas. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: http://www.duke-energy.com.

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Duke Energy believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors could cause actual results to differ materially from those in the forward-looking statements herein are discussed in Duke Energy’s 2004 Form 10-K and other filings with the Securities and Exchange Commission. 

Contact: MEDIA CONTACT: Peter Sheffield
Phone: 980/373-4503
24-Hour Phone: 704/382-8333
e-mail: pvsheffield@duke-energy.com
Contact: ANALYST CONTACT: Julie Dill
Phone: 980/373-4332
24-Hour Phone: n/a
e-mail: jadill@duke-energy.com