MCN Energy Group said it has agreed to sell the second of itsfour exploration and production (E&P) packages to an unnamedbuyer(s). The second package is made up of 150 Bcfe of provedreserves in the Midcontinent and Gulf Coast regions and drew atotal of $115 million. The assets sold represent about 13% of thetotal assets MCN put up for sale last year. About 80% of thereserves sold in the second package were gas. Not included wereMCN’s seismic data and exploratory leasehold interests in theCotton 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 westernE&P assets, including 220 Bcfe of reserves, for $165 million.Williams’ exploration and production division bought most of thewestern assets, including 184 Bcfe of proved reserves and 192,000undeveloped acres in the Rocky Mountain region for $106 million.MCN’s total E&P assets prior to the sales included 1.2 Tcf ofproved gas reserves with a book value of about $800 million. Stillto be sold are assets in Michigan and the Appalachian region. MCNintends to complete its E&P divestiture by mid-year.

The company announced plans to exit the E&P business lastsummer and took at $273 million one-time charge last year relatedto the plan. “Exiting the E&P business is a key element of ourrefocused strategic direction, which entails a lower risk profile,”MCN Chairman Alfred R. Glancy III said. “We expect to complete thesale of the Midcontinent/Gulf Coast package as well as theremaining two packages around mid-year. Proceeds from these saleswill allow us to strengthen MCN’s balance sheet by reducing ourdebt level and will help fund 1999 capital investments that areexpected to total approximately $650 million to $750 million.”

Glancy noted that each of the four packages has its ownattributes and will therefore sell at different proved reservemultiples. The Midcontinent/Gulf Coast package includes E&Pproperties primarily dispersed throughout Texas and Oklahoma.

Negotiations continue with the lead bidders on the Michiganpackage, which primarily includes Antrim Shale gas, and theAppalachian package, which consists of coal-bed methane properties.Both of these packages have long-lived reserves.

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