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Industry Briefs

January 11, 2006
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Crosstex Energy LP said it is buying 48 amine treating rental plants of Hanover Compression LP for $52 million. "Thirty-two of the treating plants we are buying are in operation adding about 20 new customers, and the other 16 are ready for refurbishment and will be available to meet our customers treating needs," said Crosstex CEO Barry E. Davis. "This purchase complements our coverage of the amine treating rental market, and will allow us to expand our service capabilities to all our treating customers by providing a larger treating plant fleet with more inventory to better target their needs." The transaction is expected to be completed in February. Hanover and Crosstex also entered into a three-year strategic alliance for compression services and equipment.

KeySpan forecasts that its 2006 earnings will increase 4-5% to $2.40-2.50 per share, driven by the strong performance of its gas distribution and electric services businesses. The company reaffirmed its prior forecast for 2005 consolidated earnings of $2.30-2.40 per share, excluding special items. "It is gratifying that KeySpan continues to grow our gas and electric businesses within the dynamic markets of the Northeast United States...," said CEO Robert B. Catell. "Our 2006 guidance reflects projected earnings growth from the ongoing strong performance of our core businesses. We remain committed to maintaining our strong financial condition with low leverage and 'A' quality credit ratings." Despite high gas commodity costs, the company's gas distribution business is expected to add $49 million of gross profit margin in 2005, $2 million above its original goal, as it continues to add gas conversions and new customers across all of its gas distribution territories. The gross profit margin goal for 2006 is $50 million. The low saturation level of approximately 55% within KeySpan's service territories provides the basis for continued organic growth.

Kerr-McGee Corp. has approved a $1 billion stock repurchase program, with plans to buy 10 million shares in the open market, which would reduce the total number of common shares outstanding 9% to 106 million. In addition, the board of directors authorized the redemption of the company's 7% debentures of 2011 at face value of $250 million. The company expects to fund both the stock repurchase and the redemption of the debentures with existing cash on hand and anticipated free cash flow. "We believe the current stock price does not reflect the value of the company's transformation into a pure-play exploration and production company with two large resource plays in the Rockies, identified production growth and meaningful unbooked discoveries," said CEO Luke R. Corbett. "The impact of the debt reduction coupled with the stock repurchase enables the company to enhance value for our stockholders while maintaining a strong capital structure." Under the approved stock repurchase program, shares may be purchased from time to time in the open market or through privately negotiated transactions at prevailing prices. The company expects to begin the repurchases following the release of its 2005 financial results on Jan. 25.

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