Western Gas Resources said Friday it sold its Edgewood gasgathering system and related facilities to Dynegy Inc. for $6.1million, and sold production assets upstream of Edgewood and a 50%joint venture interest in Redman Smackover production project inEast Texas to Vintage Petroleum for $49.7 million. The proceedsfrom the two separate transactions total $55.8 million, and Westernsaid it expects to recognize a pre-tax gain of $1 million from thesales in the fourth quarter of 1998. Both transactions closed Oct.29 with effective dates of July 1, 1998 and Nov. 1, 1998,respectively.

“The sale of these non-strategic assets is part of our ongoingstrategy to reduce debt and redeploy capital to continue thedevelopment of higher rate-of-return projects such as our coalbedmethane development in the Powder River Basin in northeastWyoming,” said Western President Lanny Outlaw.

Spokesman Ron Wirth said the sale is not part of strategic planto prepare the company for potential sale as some observersspeculated might occur. Western’s stock prices are near an all-timelow and it is one of the last remaining independent Midstreamoperators in the country. But the oil price depression hastriggered a lull in mergers and acquisitions in the sector.

“We’re not in any current discussions [with potential buyers ormerger partners] at the moment,” said Wirth. “We’re concentratingon our core business, and we’ve got some good growth opportunitiesthat we’ve identified. I know that Union Pacific has their wholepackage [of midstream assets] up for sale and there seems to bequite a bit of interest there. Depending on what kind of multiplethey receive that may rekindle a lot of peoples’ interest. We’regoing about our business, meanwhile.”

The properties Western sold to Vintage have current net dailyproduction averaging 1,100 barrels of condensate and natural gasliquids and 3,800 Mcf of gas or a total of 1,733 barrels of oilequivalent.

The gathering system sold to Dynegy currently handles about 25MMcf/d and will be connected to Dynegy’s Eustace processing plant. Rocco Canonica

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.