ReoStar Energy Corp. has completed the sale of its 30% interest in the Tri-County Gas Gathering System to Cimmarron Gathering LP, an indirect subsidiary of Copano Energy LLC, for about $15 million cash. “This sale allows ReoStar to focus on its core area of exploration in the Barnett Shale and provides us with the capital to acquire additional leasehold in the same area,” said ReoStar CEO Mark Zouvas. “The original purpose of building and owning the pipeline was to ensure access and prompt delivery of produced gas. However, in conjunction with the sale, ReoStar, through its affiliate, Rife Energy Operating Inc., negotiated a new gas gathering contract that mitigates our original concerns.” Fort Worth-based ReoStar has more than 20,000 acres of leasehold in Texas (Barnett and Corsicana) and Arkansas (Fayetteville), and drilling rig interests.
National Fuel Gas Supply Corp., the principal pipeline and storage subsidiary of National Fuel Gas Co., said its recent nonbinding open season (see NGI, April 2) to offer 500 MMcf/d of capacity or more to Leidy, PA, and/or the proposed Empire and Millennium interconnects received “robust market interest.” Bids for transportation service totaled nearly 1 Bcf, the company said. Bids included proposed transportation services from gas supply sources in the Appalachian region of western Pennsylvania, the Rocky Mountain basin via Rockies Express at Clarington, OH, and the Market Hub at Leidy. National Fuel said it is assessing what facilities would be required to accommodate the services requested and expects to begin discussions with those who requested service.
Forest Oil Corp. and The Houston Exploration Co. (THX) stockholders separately have approved a merger agreement between the two companies (see NGI, Jan. 15). On a pro forma basis, the acquisition will give Forest a total estimated proved reserves base of 2.0 Tcfe, of which about 69% would be classified as proved developed and approximately 70% would be natural gas. Denver-based Forest management and its board of directors will continue in their current positions, and it is anticipated that Forest will create a new business unit to be located in Houston. Under the terms of the agreement, THX stockholders will receive total consideration equal to 0.84 shares of Forest common stock and $26.25 in cash for each outstanding share of THX common stock, which represents $60.02/share to be received by THX stockholders based on the average closing price of Forest shares during the 10-day valuation period specified in the merger agreement. About 18.5 million of THX outstanding total shares, or 65.2%, voted to approve the transaction. Following the closing, Forest stockholders will own 73% of the combined company; THX stockholders will own 27%.
BP Exploration & Production Inc. announced a hydrocarbon discovery in an exploration well that tested its Isabela prospect in the deepwater Gulf of Mexico (GOM). The well is located on Mississippi Canyon Block 562 in 6,500 feet of water, about 150 miles southeast of New Orleans. Isabela was drilled to a total depth of 19,100 feet into Miocene era sands. “Isabela is an excellent addition to our portfolio of discoveries in the Gulf of Mexico,” said Dave Rainey, BP’s Vice President of GOM Exploration. “It will likely be tied back to our Na Kika production platform, helping to maximize the value of that infrastructure.” The well is operated by BP with a 67% working interest and is co-owned by Noble Energy Inc. with a 33% working interest. The lease was acquired at in March 1998.
The U.S. Environmental Protection Agency (EPA) said last week it made an agreement with Peoples Gas for the company to investigate 11 former manufactured gas plant sites in Chicago. Peoples will investigate contamination on each site and evaluate potential cleanup options. The process is expected to continue through 2009. Final cleanup determinations will be made by EPA in consultation with the agency’s Illinois branch, the City of Chicago and area residents. All of the properties covered by the agreement are relatively close to the Chicago River, which was a transportation route when the manufactured gas facilities operated. The plants produced gas from coal from the mid-19th through the mid-20th centuries. After World War II, coal gas was phased out and replaced with natural gas. Waste from manufactured gas operations includes tar, oil, cinders and coke (coal residue). The material contains polynuclear aromatic hydrocarbons, volatile organic compounds and heavy metals such as arsenic and lead. Four of the sites are clustered near Goose Island on the north side and five are on the south side along the river between Halsted Street and Ashland Avenue.
Terasen Gas (Vancouver Island) Inc. filed an application with the British Columbia Utilities Commission to construct and operate a 1.5 Bcf natural gas storage facility on Vancouver Island. The project, which has been in development since 2004, is expected to cost C$175-200 million (US$165-188 million). If approved the facility could be in service by late 2011.The proposed project site, known as Mt. Hayes, is north of Ladysmith, BC, on 142 hectares to be purchased by Terasen Gas (Vancouver Island) Inc. “This project plays an integral role in the regional distribution of natural gas,” said Doug Stout, Terasen Gas vice president, marketing and business development. “As a regional resource, it will ensure our customers have access to the natural gas they need for their homes and businesses.” He added that the facility also would allow the utility to become more self-sufficient and reduce its reliance on other storage facilities located in the Pacific Northwest. According to the Fortis Inc. subsidiary, the proposed storage facility would allow it to meet current and future gas demand, both on Vancouver Island and across the Lower Mainland by storing liquefied natural gas. It also would allow more efficient use of Terasen Gas’s existing pipeline systems.
The former COO of Enron Corp.’s Internet division, Enron Broadband Services (EBS), was sentenced in Houston to two years in federal prison. Kevin Hannon, 46, also was fined $125,000 by U.S. District Judge Vanessa Gilmore. He had faced up to five years in prison. Hannon was COO of EBS from January 2000 to June 2001, and he resigned from Enron in September 2001. He also had served as president of Enron’s trading and commodities business. Hannon was indicted in 2003 (see NGI, May 5, 2003), and he eventually pleaded guilty to one count of conspiracy to commit wire fraud and securities fraud, making a deal to cooperate in exchange for a reduced sentence (see NGI, Sept. 6, 2004). At the time of his plea, Hannon agreed to forfeit $2.2 million and pay $1 million to settle U.S. Securities and Exchange Commission civil charges. The former executive was considered a key witness in the trial last year of his former bosses, Enron founder Kenneth Lay and ex-CEO Jeffrey Skilling (see NGI, March 6, 2006).
EnerVest Management Partners Ltd. has closed the largest private equity fund in its 15-year history with equity commitments of $1.02 billion. EnerVest Energy Institutional Fund XI LP will be used to acquire upstream oil and gas properties and companies in North America. Fund XI is composed of 75 institutional investors including several large prominent endowments, foundations, pension funds, fund of funds and insurance companies. The fund will give Fund XI total purchasing power of $1.4 billion, representing a 107% increase in purchasing power over Fund X, which was closed in July 2005. EnerVest is also the controlling general partner of EV Energy Partners LP (EVEP), a publicly traded oil and gas master limited partnership formed in 2006 (see NGI, March 12).
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