Pioneer-Costilla Property Deal Cancelled
Pioneer Natural Resources Co. of Dallas announced the
termination of a purchase and sale agreement between Pioneer and
Costilla Energy Inc. for the sale of certain oil and gas properties
to Costilla. As a result of Costilla's failure to close the April 1
agreement, Pioneer has received one million additional shares of
Costilla common stock as liquidated damages.
"We are clearly disappointed that Costilla was not able to close
this transaction, but we remain committed to the divestiture of
approximately $500 million of non-core, non-strategic properties,"
said Scott D. Sheffield, Pioneer CEO. "We will immediately execute
our contingency plan to re-market these properties. Strengthening
oil and natural gas prices and the considerable level of
third-party interest in these properties combine to support our
confidence that re-marketing will be successful. Under our
re-marketing plan, we anticipate closing new transactions related
to these properties by the end of the third quarter."
Pioneer also said it has signed a letter of intent with an
undisclosed third party, providing for the sale of certain
unrelated gas properties in South Texas, with existing production
and exploration potential, for consideration of $65 to $70 million.
Closing is anticipated by the end of the second quarter.
Pioneer is also soliciting bids on several divestiture packages
of Canadian non-core gas and oil properties with bids due April 29
and mid-May. The divestitures are expected to close by the end of
the second quarter with anticipated proceeds of $60 to $80 million.
Southern Energy Inc., a unit of Southern Company, completed its
$801 million purchase of power plants totaling 3,065 MW of capacity
from San Francisco-based Pacific Gas and Electric Co. PG&E. The
PG&E stations, fueled mostly by natural gas, were sold in a
competitive bidding process Nov. 24.
Southern Energy is focusing its efforts to buy or build power
plants in four U.S. regions where it says generating assets are
necessary to be successful as an energy marketer - the
California/Desert Southwest, Texas/Louisiana, the Midwest and the
Northeast United States. The company will own power plants in all
four areas by October. With the California transaction, Southern
Energy now owns seven gas-fired generation units at the Pittsburg
station and two at the Contra Costa station near the San Francisco
Bay Delta, along with a gas-fired unit and three jet fuel-powered
combustion turbines at Southeast San Francisco's Potrero plant.
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