CMS Energy would boost its presence in the Midcontinent with thepurchase of Continental Natural Gas for $155 million. The companiesagreed for CMS to acquire 100% of Continental’s common stock andassume Continental debt. The deal is worth about $90 million indebt and $65 million in equity for an approximate total value of$155 million. The agreement is subject to Continental shareholderapproval, and majority shareholders have said they favor it.Closing is expected early in the fourth quarter.

Continental is engaged in gathering, processing, purchasing andmarketing gas and gas liquids in the Texas and Oklahoma panhandleregions and north central Texas. The company has about 2,000 milesof gathering systems and six processing plants with total capacityof 520 MMcf/d and 25,000 barrels of natural gas liquids per day.Continental’s revenues for 1997 totaled $357 million, whichincluded sales of 106 Bcf and three million barrels of gas liquids.Continental (CNGL) has 130 employees.

“Adding CNGL to our portfolio fits in well with CMS Energy’sdomestic 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 goalof “adding sizeable midstream energy businesses in the central andwestern U.S.” The merger will substantially increase CMS’non-utility domestic pipeline, gathering and marketing presence inthe Midcontinent region of the U.S., Haener added.

Tim Young, CMS executive director of business development, saidCMS has no immediate plans to expand the assets or close down anyplants. “We plan on basically keeping them going just like they areand adding where it makes sense.” He noted Continental has facedsome capital constraints in the past.

Terms of the merger agreement call for exchanging CMS Energycommon shares for Continental shares in a pooling of interests.Continental shares will be valued at $10 each. CMS Energy’s shareswill be valued at the average price for a 10-day period ending fivedays before closing.

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