Rapid City, SD-based Black Hills Corp. said Wednesday it is selling energy marketing unit Enserco Energy Inc. to Houston-based Twin Eagle Resource Management LLC for $160-170 million. The transaction is expected to close by the end of March.

Twin Eagle, whose chairman is Chuck Watson, founder of Natural Gas Clearinghouse, later known as Dynegy Inc., would gain Enserco’s North American-based natural gas, power, coal and crude oil marketing operations. Enserco operations include crude gathering and marketing assets averaging 30,000 b/d through 12 owned or leased crude terminals; natural gas marketing with 8 Bcf of leased storage and 250,000 MMBtu/d of firm transportation; power marketing serving municipal and retail load; coal marketing and 35,000 tons/d of physical coal deliveries; as well as rail transportation contracts.

Standard & Poor’s Ratings Services said Thursday that the pending deal has no immediate impact on Black Hills’ credit ratings and it expects the company to use part of the proceeds to pay down short-term debt and fund utility expenditures.

The sale would allow Black Hills to fund its strategic growth plans, which are to focus more on utilities, power generation and fuel production businesses, officials said. Twin Eagle’s senior management said Enserco should give the company a strong western U.S. and Canadian footprint. The transaction is subject to regulatory approvals.

The deal is the culmination of “multiple unsolicited inquiries” that Black Hills received from companies in 3Q2011, said CEO David Emery, who noted that Black Hills subsequently sought offers to analyze the marketing arm’s projected value. “After the strategic analysis, a decision was made to divest the energy marketing business.”

Enserco “will immediately accelerate our organic growth plan to build our capabilities in North America,” said Twin Eagle CEO Griff Jones. “We were also attracted to Enserco’s physical coal and crude operations that align with Twin Eagle’s business philosophy of strong customer relationships, great logistics expertise and solid risk management.”

In conjunction with the sale, Black Hills raised its net earnings guidance for 2011 to a range of $1.90 and $1.96/share.

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