Duke Energy on Friday disclosed that it is in discussions to take on a partner to expand Crescent Resources, its real estate development business. Duke's board of directors has authorized management to explore the creation of a joint venture with an undisclosed potential partner.
The current Crescent team would continue to operate the company, which would participate in each of the sectors of real estate development in which it is now involved, Duke said.
"We believe a joint venture business model better positions Crescent for the future and maximizes its value to Duke Energy shareholders," said Jim Mogg, advisor to Duke's chairman. "Retaining a significant ownership allows Duke Energy to maintain Crescent's valuable brand image, to participate in Crescent's future success and to fulfill Crescent's commitment to the communities it serves."
Duke Energy, which completed its merger with Cinergy in April, recently said that it will sell its commercial marketing and trading business to lower its risk profile. The affected operations include Cinergy Marketing and Trading LP and Cinergy Canada Inc., along with some subsidiaries and affiliates.
Duke's commercial group's services include power, natural gas, coal and emission commodity trading, as well as risk management, asset management and energy portfolio management.
In its last quarterly financials prior to consolidation with merger partner Cinergy, Duke reported that first quarter earnings from continuing operations tumbled 37 cents per share to 50 cents/share largely due to a one-time gain in 1Q2005 on the sale of TEPPCO. Quarterly earnings from ongoing operations still exceeded analysts' estimates by a penny (see NGI, May 8).
Crescent Resources reported first quarter 2006 segment earnings before interest and taxes (EBIT) from continuing operations of $42 million compared to $52 million in the previous year's quarter.
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