CMS to Buy Gathering Assets in Midcontinent
The market reach of CMS Energy is set to grow with a planned
Midcontinent gathering-processing acquisition. CMS plans to buy
Continental Natural Gas for $155 million. Continental is engaged in
gathering, processing, purchasing and marketing gas and gas liquids
in the Texas and Oklahoma panhandle regions and north central
The companies agreed for CMS to acquire 100% of Continental's
common stock and assume Continental debt. The deal is worth about
$90 million in debt and $65 million in equity for an approximate
total value of $155 million. The agreement is subject to
Continental shareholder approval, and majority shareholders have
said they favor it. Closing is expected early in the fourth
Continental has about 2,000 miles of gathering systems and six
processing plants with total capacity of 520 MMcf/d and 25,000
barrels of natural gas liquids per day. Continental's revenues for
1997 totaled $357 million, which included sales of 106 Bcf and
three million barrels of gas liquids. Continental (CNGL) has 130
"Adding CNGL to our portfolio fits in well with CMS Energy's
domestic strategy of expanding its energy market reach in the U.S.
beyond our traditional midwestern base," said William J. Haener,
CEO of CMS Gas Transmission and Storage. It also fits with the goal
of "adding sizeable midstream energy businesses in the central and
western U.S." The merger will substantially increase CMS'
non-utility domestic pipeline, gathering and marketing presence in
the Midcontinent region of the U.S., Haener added.
Tim Young, CMS executive director of business development, said
CMS has no immediate plans to expand the assets or close down any
plants. "We plan on basically keeping them going just like they are
and adding where it makes sense." He noted Continental has faced
some capital constraints in the past.
Terms of the merger agreement call for exchanging CMS Energy
common shares for Continental shares in a pooling of interests.
Continental shares will be valued at $10 each. CMS Energy's shares
will be valued at the average price for a 10-day period ending five
days before closing.
Joe Fisher, Houston
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