El Paso Corp.’s exploration and production subsidiary has agreed to sell some noncore properties in its onshore and Texas Gulf Coast regions in three agreements worth an estimated $517 million. El Paso did not disclose the buyers.
At the end of 2007 the company had an estimated 191 Bcfe of proved reserves associated with the properties to be sold, with roughly half coming from each region. In December the average output for the Texas Gulf Coast properties was 39 MMcfe/d; the onshore properties produced 17 MMcfe/d.
Brent Smolik, president of El Paso Exploration & Production Co., called the sale agreements “another important step in the high grading of our portfolio. We expect these sales, together with our 2007 acquisitions, to meaningfully improve the efficiency of our operations, the depth of our inventory and our future growth potential. They will create greater geographic focus within our onshore and Texas Gulf Coast operating regions and remove a number of relatively high-cost properties.”
The transactions are expected to close by the end of March. Proceeds would be used to repay debt incurred with the $879.1 million acquisition of Peoples Energy Production Co. in September (see Daily GPI, Oct. 1, 2007). El Paso also is negotiating with prospective bidders to sell selected noncore Gulf of Mexico properties.
El Paso did not disclose which onshore properties were sold. The company’s onshore division focuses on exploring for unconventional natural gas in the Rocky Mountains, New Albany Shale, Arkoma/Midcontinent, Ark-La-Tex and the Raton and Black Warrior basins. The Peoples acquisition built El Paso’s reserves in the Ark-La-Tex region and along the Texas Gulf Coast.
Jefferies Randall & Dewey acted as financial adviser.
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