Dynegy Canada Inc., a subsidiary of Houston-based Dynegy Inc.,announced Friday that it has acquired the midstream gas processingfacilities and gathering lines of Compton Petroleum Corp. for anestimated $39 million.

Included in the sale were the Mazeppa and Gladys gas plants insouthern Alberta and about 78 miles of associated gathering lines.The two facilities have a combined capacity to process 97 MMcf/d ofsour gas.

In addition, the two companies worked out an incentive paymentarrangement under which Dynegy Canada will pay Compton between atotal of $8 million and $16 million, depending on the productivityof the wells, to drill up to a maximum of 50 new wells in theMazeppa/Nanton area. This would be in addition to the $39 millionfor the processing facilities. The gas would be processed throughthe Mazeppa and Gladys plants, according to a spokeswoman inHouston. Under the deal, Compton also was guaranteed set rates forprocessing and transporting its gas.

“The acquisition of these midstream assets is a key step in ourstrategy to re-establish Dynegy’s Canadian asset base,” said DynegyChairman Chuck Watson in Houston. “The Mazeppa facilitiescomplement our existing gas marketing and trading business. Inaddition, our continuing relationship with Compton will generatefuture opportunities to add throughput to these facilities.”

The deal has made Compton debt free and has given it anavailable line of credit in excess of C$52 million to “aggressivelypursue its drilling program in southern Alberta,” noted ComptonPresident Ernie Sapieha. “The drilling arrangement with Dynegy andtheir planned expenditures will allow us to maintain low findingand development costs while actively pursuing explorationprospects.”

Susan Parker

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.