The market reach of CMS Energy is set to grow with a plannedMidcontinent gathering-processing acquisition. CMS plans to buyContinental Natural Gas for $155 million. Continental is engaged ingathering, processing, purchasing and marketing gas and gas liquidsin the Texas and Oklahoma panhandle regions and north centralTexas.

The companies agreed for CMS to acquire 100% of Continental’scommon stock and assume Continental debt. The deal is worth about$90 million in debt and $65 million in equity for an approximatetotal value of $155 million. The agreement is subject toContinental shareholder approval, and majority shareholders havesaid they favor it. Closing is expected early in the fourthquarter.

Continental has about 2,000 miles of gathering systems and sixprocessing plants with total capacity of 520 MMcf/d and 25,000barrels of natural gas liquids per day. Continental’s revenues for1997 totaled $357 million, which included sales of 106 Bcf andthree million barrels of gas liquids. Continental (CNGL) has 130employees.

“Adding CNGL to our portfolio fits in well with CMS Energy’sdomestic strategy of expanding its energy market reach in the U.S.beyond our traditional midwestern base,” said William J. Haener,CEO of CMS Gas Transmission and Storage. It also fits with the goalof “adding sizeable midstream energy businesses in the central andwestern U.S.” The merger will substantially increase CMS’non-utility domestic pipeline, gathering and marketing presence inthe Midcontinent region of the U.S., Haener added.

Tim Young, CMS executive director of business development, saidCMS has no immediate plans to expand the assets or close down anyplants. “We plan on basically keeping them going just like they areand adding where it makes sense.” He noted Continental has facedsome capital constraints in the past.

Terms of the merger agreement call for exchanging CMS Energycommon shares for Continental shares in a pooling of interests.Continental shares will be valued at $10 each. CMS Energy’s shareswill be valued at the average price for a 10-day period ending fivedays before closing.

Joe Fisher, Houston

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