MCN Sells Midcontinent, Gulf E&P Assets
MCN Energy Group said it has agreed to sell the second of its
four exploration and production (E&P) packages to an unnamed
buyer(s). The second package is made up of 150 Bcfe of proved
reserves in the Midcontinent and Gulf Coast regions and drew a
total of $115 million. The assets sold represent about 13% of the
total assets MCN put up for sale last year. About 80% of the
reserves sold in the second package were gas. Not included were
MCN's seismic data and exploratory leasehold interests in the
Cotton Valley Pinnacle Reef play in east Texas, the company said.
Those assets apparently will be included in a later sale.
Last month, the company sold its first package of western
E&P assets, including 220 Bcfe of reserves, for $165 million.
Williams' exploration and production division bought most of the
western assets, including 184 Bcfe of proved reserves and 192,000
undeveloped acres in the Rocky Mountain region for $106 million.
MCN's total E&P assets prior to the sales included 1.2 Tcf of
proved gas reserves with a book value of about $800 million. Still
to be sold are assets in Michigan and the Appalachian region. MCN
intends to complete its E&P divestiture by mid-year.
The company announced plans to exit the E&P business last
summer and took at $273 million one-time charge last year related
to the plan. "Exiting the E&P business is a key element of our
refocused strategic direction, which entails a lower risk profile,"
MCN Chairman Alfred R. Glancy III said. "We expect to complete the
sale of the Midcontinent/Gulf Coast package as well as the
remaining two packages around mid-year. Proceeds from these sales
will allow us to strengthen MCN's balance sheet by reducing our
debt level and will help fund 1999 capital investments that are
expected to total approximately $650 million to $750 million."
Glancy noted that each of the four packages has its own
attributes and will therefore sell at different proved reserve
multiples. The Midcontinent/Gulf Coast package includes E&P
properties primarily dispersed throughout Texas and Oklahoma.
Negotiations continue with the lead bidders on the Michigan
package, which primarily includes Antrim Shale gas, and the
Appalachian package, which consists of coal-bed methane properties.
Both of these packages have long-lived reserves.
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