NGI The Weekly Gas Market Report / NGI All News Access

Western Unloads Non-Core East Texas Gathering, Producing Assets

Western Unloads Non-Core East Texas Gathering, Producing Assets

Western Gas Resources said Friday it sold its Edgewood gas gathering system and related facilities to Dynegy Inc. for $6.1 million, and sold production assets upstream of Edgewood and a 50% joint venture interest in Redman Smackover production project in East Texas to Vintage Petroleum for $49.7 million. The proceeds from the two separate transactions total $55.8 million, and Western said it expects to recognize a pre-tax gain of $1 million from the sales in the fourth quarter of 1998. Both transactions closed Oct. 29 with effective dates of July 1, 1998 and Nov. 1, 1998, respectively.

"The sale of these non-strategic assets is part of our ongoing strategy to reduce debt and redeploy capital to continue the development of higher rate-of-return projects such as our coalbed methane development in the Powder River Basin in northeast Wyoming," said Western President Lanny Outlaw.

Spokesman Ron Wirth said the sale is not part of strategic plan to prepare the company for potential sale as some observers speculated might occur. Western's stock prices are near an all-time low and it is one of the last remaining independent Midstream operators in the country. But the oil price depression has triggered a lull in mergers and acquisitions in the sector.

"We're not in any current discussions [with potential buyers or merger partners] at the moment," said Wirth. "We're concentrating on our core business, and we've got some good growth opportunities that we've identified. I know that Union Pacific has their whole package [of midstream assets] up for sale and there seems to be quite a bit of interest there. Depending on what kind of multiple they receive that may rekindle a lot of peoples' interest. We're going about our business, meanwhile."

The properties Western sold to Vintage have current net daily production averaging 1,100 barrels of condensate and natural gas liquids and 3,800 Mcf of gas or a total of 1,733 barrels of oil equivalent.

The gathering system sold to Dynegy currently handles about 25 MMcf/d and will be connected to Dynegy's Eustace processing plant. Rocco Canonica

©Copyright 1998 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus