An April 2 filing with the Securities and Exchange Commissionsuggests the rumored sale of Enron’s controlling interest in EnronOil & Gas (EOG) could be in the offing. In the filing, Enronsaid it is pondering EOG’s potential sale among other possibilitiesfor the exploration and production arm of the energy giant.

Following the receipt of a proposal from a third party toacquire EOG, a special committee was formed to determine theproposal’s fairness. “Enron has been informed that the SpecialCommittee’s financial advisors have invited certain other thirdparties to review confidential information about the Issuer andhave solicited indications of interest from those third partieswith respect to one or more possible alternative transactions tothe Proposal,” the Enron filing says.

The filing says the committee has told Enron it is willing toconsider alternatives to the third party proposal but has said itis not willing to recommend the proposal. “In light of the SpecialCommittee’s response, Enron has been meeting with its legal andfinancial advisors in order to determine whether the Proposal canbe modified in a way that, taking into account tax and otherstructural matters, would be acceptable to Enron.”

The company declined to comment further on the filing, whichalso makes clear a transaction may not happen at all.

In December Enron made an SC13D filing with the SEC stating itreceived an unsolicited offer for its 53.5% share of EOG, one of thelargest independent gas producers in the U.S. (see Daily GPI Dec. 17, 1998). According to thesolicitation, the unnamed third party would acquire Enron’s shares inEOG and make an offer for all the outstanding shares. The third partyalso would require that Enron dispose of certain other assets.

Enron formed EOG in 1987 from its existing InterNorth andHouston Natural Gas units. It maintained full ownership until 1989when it spun off a portion to the public to raise $200 million. EOGexplores for and produces oil and gas in the United States, Canada,Trinidad and India. About 69% of its reserves are in North Americawhile the rest are overseas.Enron formed EOG in 1987 from itsexisting InterNorth and Houston Natural Gas Units. It maintainedfull ownership until 1989 when it spun off a portion to the publicto raise $200 million. EOG explores for and produces oil and gas inthe United States, Canada, Trinidad and India. About 69% of itsreserves are in North America while the rest are overseas.

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