Duke Energy Transport and Trading signed a letter of intent tobuy some of Dynegy’s U.S. crude oil transportation and marketingoperations for $50 to $55 million pre-tax subject to terms of theagreement. The sale is expected to close by the end of the thirdquarter.

Dynegy CEO Chuck Watson said the sale of the crude oil businessis consistent with Dynegy’s strategy to redeploy capital to our itsbusinesses. “Although we have been pleased with the recentfinancial performance of our crude oil business, we believe thatgrowth opportunities in natural gas, natural gas liquids, powergeneration and energy marketing are significant and will offergreater returns for our shareholders over time. Proceeds from thissale, along with other discrete divestitures of non-strategicassets such as the pending sale of Ozark Gas Pipeline, willstrengthen our financial position and supplement our cash flowavailable for reinvestment as the dynamic restructuring of theelectric power industry accelerates.”

Under the agreement, Duke will acquire Dynegy’s crude oilpipeline, gathering and marketing business in Oklahoma, Texas andLouisiana. Dynegy’s crude oil operations in Canada are notaffected.

“Duke Energy Transport and Trading’s strategy is to continue toacquire and consolidate assets in the crude oil marketing andtransportation industry. This agreement to buy Dynegy’s crude oiltransportation and trading operations will expand our marketpresence significantly,” said Jim Mogg, vice chairman. “Inaddition, these assets are an excellent fit with our existingpipeline systems in North Texas and Oklahoma and will extend oursystem into Cushing, OK, which will increase our deliverabilityinto the country’s primary crude oil trading market. The financialperformance of our crude oil business has been steadily increasingand these assets will help the company continue that growth trend.”Duke Energy Transport and Trading currently owns and operates about2,300 miles of crude oil and gas liquids pipelines, transporting106,000 barrels per day. In addition, the company now purchases andmarkets about 75,000 barrels per day of crude oil from thewellhead.

The primary assets included in the sale are Dynegy’s on-systemgathering company in Oklahoma, Dynegy’s Grand Lake Liquids Systemin Louisiana and the assets of the Graham Gathering System in NorthTexas. The sale also includes the company’s 150,000 barrels per daycrude oil supply, transportation and marketing business.

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