Gulf Canada Resources Ltd. has been a very busy company thisOctober, and its only just beginning. After announcing it plannedto acquire Crestar Energy two weeks ago, the company yesterday saidit has mailed its formal purchase offer to the shareholders ofCrestar, and in unrelated news, the company has sold its remaining50% interest in Gulf Midstream Services (GMS) located in westernCanada to Keyspan Corp.

The deal offered to Crestar shareholders is C$3.25 in cash and3.333 ordinary shares of Gulf in exchange for each Crestar commonshare (see Daily GPI,Oct. 3). Shareholders may request a different ratio as long as thefinal deal for all of Crestar’s shares would be approximately C$185million in cash and about 190 million Gulf ordinary shares.

The offer which is valued at C$1.7-billion, C$2.3 billionincluding debt, was agreed upon by the boards of Gulf and Crestaron Oct. 2 and will be open for acceptance until 1:01 am (CalgaryTime) on Nov. 6. Gulf said the addition of Crestar will more thandouble its western Canada gas production to over 615 MMcf/d.

After selling 50% of its midstream gas business for US $189 millionto Keyspan Energy Development Corp. to form the GMS partnership inDecember 1998, Gulf announced yesterday that it has agreed to sell itsremaining 50% stake in GMS to Keyspan for an unspecified sum (seeDaily GPI, Nov. 5, 1998). Uponcompletion of the sale, GMS’s name will change to Keyspan EnergyCanada (KEC).

Analysts estimate the deal to be valued at about C$200 million,with approximately C$100 million attributable to the assumption ofdebt.

“Selling our interest in the partnership will allow us to focusour attention and capital on what Gulf does best: exploration forand production of oil, natural gas and natural gas liquids. Weannounced our intention to sell our remaining interest in GMSseveral months ago,” said CEO Dick Auchinleck. “This transactionmarks the end of our program of asset disposals to restructure ourbalance sheet and we are now entering an era of disciplined,focused growth. We will retain a strategic link with KEC and haveestablished priority processing provisions for Gulf’s gas at theirfacilities.”

Gulf spokesman Peter Hunt denied that GMS was sold to free upcapital for the Crestar acquisition. “The Crestar purchase will befunded from our existing lines of credit,” said Hunt. “We haveplenty of headroom on it, so the fact that the two come together isa coincidence rather than being linked at all.”

The GMS partnership holds substantial interests in 14 gasprocessing plants and extensive gathering systems, with more than1.5 Bcf/d of raw gas processing capacity.

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