Continuing with its plan of focusing on core assets, Duke Energy Field Services (DEFS) on Friday signed two separate purchase and sale agreements by which it will sell one package of assets in Mississippi, Texas, Alabama and Louisiana to Crosstex Energy Services LP. and a second package of assets in eastern Oklahoma to ScissorTail Energy LLC.

Under the terms of the agreements, the assets to be sold to Crosstex are the Associated Intrastate Mississippi (AIM) Pipeline System, a 12.4% interest in the Seminole gas processing plant, Conroe gas plant and gathering system, Black Warrior pipeline system and two smaller systems — Aurora Centana and Cadeville. The assets to be sold to ScissorTail consist of various gas processing plants and approximately 2,800 miles of gathering pipeline in eastern Oklahoma.

“These sales are consistent with our strategy to rationalize and optimize our asset base,” said Jim Mogg, CEO of DEFS. “The transactions, which total in excess of $90 million, were identified in our 2003 plan.”

DEFS said it expects the transactions to close by June 30. Proceeds from both sales will be used to pay down debt.

The move caps off a busy week for Duke Energy, the Charlotte, NC-based company that owns approximately 70% of DEFS. During the week, Duke Energy released its first quarter earnings (see related story) and completed a public offering of $700 million aggregate principal amount of convertible senior notes due 2023.

The offering was made under the company’s existing shelf registration statement, with net proceeds of the offering to be used for general corporate purposes, which may include the reduction of outstanding commercial paper, Duke Energy said. Standard & Poor’s Ratings Services had assigned its ‘A-‘ senior unsecured debt rating to the senior notes with outlook ‘negative.’

“Our negative outlook on Duke Energy reflects the need to review the company’s progress on its asset sale strategy, as well as updated financial projections, to determine the likelihood and timing of financial improvement,” said Standard & Poor’s credit analyst Dimitri Nikas. “Duke Energy will need to improve funds from operations (FFO) interest coverage and FFO to total debt beyond 4x and 16%, respectively, to maintain current ratings.” S&P added that the FERC’s investigations of energy traders continues to be a concern.

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