NGI The Weekly Gas Market Report
Coast Energy Canada Inc., a wholly owned subsidiary ofCornerstone Propane Partners L.P., finalized the purchase of thegas trading assets of ERI (Equitable Resources) Canada Ltd.,effective Dec. 31. Terms of the acquisition were not disclosed.
With the acquisition, Coast Energy Canada will have anestablished, full-service gas trading and marketing companyheadquartered in Calgary. Expected annual revenues from thisacquisition should exceed US$400 million based on last year’sperformance. Coast’s portfolio now includes supplies from numerousproducers and gathering companies within Canada and sales acrossall of North America. Coast expects to market about 800,000 MMBtu/dand estimates annual pre-tax earnings from this asset of about $2million.
“We are extremely pleased to have consummated this acquisitionand to have the entire team from ERI Canada join Coast EnergyCanada,” said Vincent J. Di Cosimo, Coast Energy Canada presidentand COO of Coast Energy Group (CEG). “This additional presence inCanada, combined with CEG’s significant market and distribution inthe U.S., substantially increases our ability to better service ourcustomers across America.” Di Cosimo said he was prevented fromdiscussing marketed gas volumes because of an agreement withEquitable.
Equitable Resources is recording a total of $120 million inrestructuring-related charges, the company said last month in acontinuing effort started by CEO Murry Gerber to focus on corecapabilities. Half of the charges will be accumulated because ofseverance, staff reductions and elimination of debt. Equitableexpects a 20% employee reduction compared to mid-1998 staff levels.The other half of the charge is a result of the devaluation andconsequent write-down of selected Gulf region gas and oilproperties due to low commodity prices. Overall, Equitable expectsthe measures to reduce annual expenses by $20 million in 1999.
Joe Fisher, Houston
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