Semco Sells Gas Marketing Unit to MCN
Semco Energy Inc. sold Semco Energy Services, its natural gas
marketing arm, to MCN Energy Group only weeks after announcing
intentions to exit the gas marketing side of its business. No
financial terms of the deal were disclosed except that Semco
expects to record a gain on the sale and the companies expect the
transaction to close by the end of March.
William Johnson, Semco Energy's CEO, said the move was made so
Semco can focus on becoming one of the largest providers of
underground engineering and construction services in North America.
Semco's businesses in both industries increased their revenues in
1998. Engineering Services jumped from $5.6 million in 1997 to
$41.4 million in 1998. Construction Services nearly doubled its
revenue from $13.2 million in 1997 to $25.9 million in 1998.
In 1998, Semco's gas marketing outfit reported $398 million in
revenues compared to $555 million in 1997. Although it sold 166 Bcf
(455 MMcf/d) of gas, 1998 retail sales totaled 13 Bcf to 140
industrial and commercial customers and 4,000 retail accounts
throughout Michigan. The rest of the volume was sold to wholesale
Johnson first announced plans to sell Semco Energy Services when
the company posted its 1998 results in early February. He said then
that "energy marketing is a very competitive business with high
risks and low returns. It does not fit well with our future
MCN Energy's subsidiary, CoEnergy Trading Co., will acquire the
13 Bcf of contracts. An MCN spokesman said the company was not
interested in Semco Energy Services' wholesale business. In 1998,
CoEnergy marketed 500 Bcf of gas to customers in the Great Lakes,
Mid-Atlantic, New England and eastern Canada. "This acquisition
fits very well with our existing marketing, transportation and
storage assets," said CoEnergy CEO, Glen Kinder.
MCN Energy spokesman Stewart Lawrence said, "This is a great
addition in terms of location... But we have no interest in
wholesale. All we are doing is picking up 13 Bcf of gas contacts...
It's a nice addition, but we sold 500 Bcf to customers last year."
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