Independent Tom Brown Inc. is stocking up on natural gas reserves after agreeing to merge with privately held Matador Petroleum Corp. The transaction will increase the Denver-based independent’s reserves by 37% to 1 Tcfe. Matador, a privately held exploration and production company, is active primarily in the East Texas Basin and the Permian Basin of southeastern New Mexico and West Texas. It produced 61 MMcfe/d in the first quarter and holds proved reserves estimated to be 36% undeveloped, with 86% natural gas. The reserve life is 12 years. Additionally, Matador holds about 56,000 net developed ares and 111,000 net undeveloped acres. Tom Brown said the merger would be accretive to earnings and cash flow this year. The agreement already has been approved by both of the companies’ boards, and the deal is expected to close before the end of June. Under the terms of the definitive merger agreement, Matador shareholders will receive $17.53 per share and Tom Brown will assume $105 million of net debt. The transaction is subject to approval by the holders of two-thirds of Matador’s outstanding stock and other customary conditions. In connection with the execution of the merger agreement, Matador shareholders, who own 43% of Matador’s outstanding shares, have agreed to vote in favor of the transaction. Tom Brown said it would fund the acquisition initially with bank debt , but it also is evaluating other alternatives, including issuing equity as well as debt placement in private markets.

Falcon Gas Storage Co. Inc. said Tuesday it will reassess its design parameters for Phase 1 of its MoBay Storage Hub project in Alabama after capacity bids submitted during the open season for the facility exceeded the working gas capacity proposed. Scheduled to be in service during the fourth quarter of 2004, the high-deliverability, multi-cycle natural gas (HDMC) facility’s first phase originally was planned for 20 Bcf of working gas capacity, along with 450 MMcf/d of injection and withdrawal capability. Mark Fullerton, project manager for the MoBay Storage Hub, said that as a result of the bids received, “we are reassessing the Phase I design parameters for the project, which could result in even higher levels of working gas capacity and especially greater injection and withdrawal capabilities, which frankly we did not anticipate at this stage of development. That’s the kind of ‘problem’ we like to have.” The MoBay Storage Hub plans direct connections to the Transco Mobile Bay Lateral, Gulf South Mobile Bay Lateral, Gulfstream Natural Gas System at Gulfstream’s Station 100, and Florida Gas Transmission Mobile Bay Lateral pipelines.

Williams sold a small package of Rocky Mountain region producing properties in the Denver-Julesberg (D-J) basin in northeastern Colorado to Bridgeport, WV-based Petroleum Development Corp. for $28 million. The D-J Basin properties were among those announced for sale earlier this year as part of Williams’ financial-strengthening plan. The transaction is expected to close in June, subject to typical closing conditions. The properties represent 6 MMcf/d of net production and less than 1% of Williams’ proved reserves of 2.8 Tcf at year-end 2002, the company said. Including this transaction, Williams has sold or agreed to sell a number of exploration and production properties this year for a total of $477 million. The company continues to market other E&P properties in the Green River basin and the Gulf Coast. Its E&P business focuses on gas from tight-sands formations and coal-bed methane reserves in the Piceance, San Juan, Powder River, Arkoma and Green River basins.

Exelon Power Northeast Operations plans to shut down four older inefficient oil- and gas-fired power plants in New England by the end of the year. The units, which together total about 620 MW, are Mystic Station Units 4, 5, and 6 (each 90 MW) located in Everett, MA, and New Boston Station 1 (350 MW), located in South Boston, MA. The company said its analysis has shown that these older units would require significant investments and material upgrades to ensure continued efficient and reliable operations. It has started discussions with its lenders to restructure the financing for the plants in order to retire them. Exelon believes there will be no impact on electric reliability. The retirement of the plants was made possible by the construction of two, new state-of-the-art generating facilities at Mystic Station. Mystic Station 8 began successful commercial operations in April. Mystic Station Unit 9 is expected to begin operations in May or early June. Once both units are operational, they will provide 1,600 MW of power to the greater Boston region.

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