Semco Energy Inc. sold Semco Energy Services, its natural gasmarketing arm, to MCN Energy Group only weeks after announcingintentions to exit the gas marketing side of its business. Nofinancial terms of the deal were disclosed except that Semcoexpects to record a gain on the sale and the companies expect thetransaction to close by the end of March.

William Johnson, Semco Energy’s CEO, said the move was made soSemco can focus on becoming one of the largest providers ofunderground engineering and construction services in North America.Semco’s businesses in both industries increased their revenues in1998. Engineering Services jumped from $5.6 million in 1997 to$41.4 million in 1998. Construction Services nearly doubled itsrevenue from $13.2 million in 1997 to $25.9 million in 1998.

In 1998, Semco’s gas marketing outfit reported $398 million inrevenues compared to $555 million in 1997. Although it sold 166 Bcf(455 MMcf/d) of gas, 1998 retail sales totaled 13 Bcf to 140industrial and commercial customers and 4,000 retail accountsthroughout Michigan. The rest of the volume was sold to wholesalecustomers.

Johnson first announced plans to sell Semco Energy Services whenthe company posted its 1998 results in early February. He said thenthat “energy marketing is a very competitive business with highrisks and low returns. It does not fit well with our futurebusiness strategies.” Semco was unavailable for comment by presstime.

MCN Energy’s subsidiary, CoEnergy Trading Co., will acquire the13 Bcf of contracts. An MCN spokesman said the company was notinterested 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 acquisitionfits very well with our existing marketing, transportation andstorage assets,” said CoEnergy CEO, Glen Kinder.

Stewart Lawrence, an MCN Energy spokesman, said this deal shouldbe kept in perspective. “Don’t get me wrong. This is a greataddition in terms of location and it being in a core area for us.But we have no interest in the wholesale market. All we are doingis picking up that 13 Bcf of gas contacts to industrial, commercialand retail customers. It’s a nice addition, but we sold 500 Bcf tocustomers last year.”

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