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MCN Buys Howard Energy's Retail Marketing Assets

MCN Buys Howard Energy's Retail Marketing Assets

Less than a week after buying the gas marketing operations of Semco Energy, MCN Energy subsidiary CoEnergy Trading announced the purchase of Michigan-based Howard Energy Marketing's retail gas marketing assets for an undisclosed amount. The purchases are designed to bolster MCN's unregulated marketing operations and its interest in the proposed Vector and Millennium Pipeline projects, which will add 1 Bcf/d of new gas transportation capacity through the region starting in November 2000, the company said.

The Howard Energy assets will boost CoEnergy's retail presence in the Midwest and Northeast by about 20%. They include contracts for delivery to 500 industrial and commercial customers, or about 100 Bcf/year of gas demand. The transaction also includes marketing offices in Madison and Green Bay, WI, Traverse City, MI, and Buffalo, NY. CoEnergy said all 16 Howard employees affected by the acquisition will be offered jobs. MCN said it plans to service the contracts through subsidiaries' existing or planned pipeline and storage facilities.

The Semco Energy assets purchased last week include about 455 MMcf/d in gas sales and revenues of about $398 million. Semco's retail sales in 1998 totaled 13 Bcf and included about 140 industrial and commercial customers and 4,000 other retail accounts throughout Michigan.

"CoEnergy has grown to become a successful energy marketer in the Great-Lakes, Mid-Atlantic and New England regions of the U.S., as well as in eastern Canada, with annual sales volumes approximating 500 Bcf," said Glen Kinder, CoEnergy CEO. "These new sales volumes further strengthen the economic position of our company's interest in the proposed Vector and Millennium pipeline systems and in our Washington 10 storage project, because we can utilize these assets in delivering gas to customers."

An MCN spokesman said these transactions are part of CoEnergy's continuing effort to grow its marketing operations to support its pipeline interests and are not part of the company's larger strategic moves, which will include selling exploration and production operations and some international assets this year. The E&ampP asset sale could begin as early as next week with a block of western properties concentrated in the Jonah Field of the Green River Basin in southwestern Wyoming. The other three groups of properties, divided into Appalachian coal-bed methane reserves, Antrim Shale reserves in Michigan and a variety of assets in the Midcontinent and Gulf Coast regions, are expected to be sold off early this summer, along with about $130 million in international assets. The E&ampP assets include 1.2 Tcf of proved gas reserves with a book value of about $800 million.

Rocco Canonica

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