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Industry Briefs

June 11, 1999
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Industry Briefs

Shareholders for both El Paso Energy and Sonat Inc. announced overwhelming approval of the two companies' proposed merger Thursday. For Sonat, representatives for 86% of the company's outstanding shares voted in a special shareholders' meeting, and the merger was approved by 98%. El Paso Energy's stockholders also approved the merger at a meeting held Thursday. Out of 93 million El Paso shares that voted, 95% voted in favor of the merger. Under the terms of the $6 billion agreement, which was announced in March (see Daily GPI, March 16), Sonat stockholders will receive one share of El Paso Energy common stock for each share of Sonat common stock exchanged in the merger. El Paso will issue 110 million common shares to complete the transaction after the deal closes. Sonat said it expects the regulatory reviews of the proposed merger to be completed during the third or fourth quarter of this year.

As expected, the European Commission has launched an in-depth probe into the proposed merger between Exxon and Mobil, citing concerns about reduced competition. The commission said it will make a detailed assessment of the impact of the transaction on exploration, development and production of crude oil and natural gas, gas distribution in the Netherlands and in Germany, the lubricants supply chain, aviation lubricants, new technology converting natural gas into fuels, and the refining and marketing of motor fuels in a number of European countries. A final decision by the commission is expected by mid-October. According to the merger, Exxon shareholders will own 70% of the combined Exxon Mobil entity, while Mobil shareholders will own 30%.

Magnum Hunter Resources closed the previously announced acquisition of oil and gas reserves and related assets from Vastar Resources. The acquisition included Vastar's interest in 476 wells, a gas processing plant and two gas gathering systems located in the states of Texas, Oklahoma and Arkansas. The total purchase price was $32.5 million, after purchase price adjustments, including an April 1 effective date. The reserves and related assets are located in the Walnut Bend Field in North Central Texas, the Madill Field in Southern Oklahoma, and the Walker Creek Field in Southwestern Arkansas. The Company's working interests in the three fields range from 56-100%. The three fields generate net sales of 1,000 b/d of liquids and 10 MMcf/d of gas.

The California Public Utilities Commission voted Thursday to cut Pacific Gas & Electric Co.'s regulated rate of return for 1999 to 10.6% from its 1998 rate of 11.2%. The agency also decided at Thursday's meeting to leave Southern California Edison Co.'s 1999 rate of return unchanged at 11.6 percent and to lower San Diego Gas & Electric Co.'s return to 10.6%. The new rates will be retroactive to Jan. 1. PG&E had asked to raise its ROE for 1999 to 12.1%, while an administrative law judge had called for all three to have RORs set at 10.6%.

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