MCN Energy Group Inc. completed the previously announced sale ofits share of the Midland Cogeneration Venture Limited Partnership(MCV) in Michigan. Subsidiaries of Coastal bought MCN’s 23% interestin MCV for an undisclosed amount said to be near book value. MCV wasdesignated as a Qualifying Facility (QF) under the federal PublicUtility Regulatory Policies Act of 1978, or PURPA. PURPA requiresutilities to purchase power from QFs at the utilities’ avoided cost ofproducing power. MCN is selling its interests in three other QFs inanticipation of its pending merger with DTE Energy Co. (see Daily GPI,Oct. 6).
Energy East Corp. has received tentative approval for its proposedacquisition of CTG Resources Inc. from the Connecticut Department ofPublic Utility Control. A final decision is expected Jan. 19. The dealstill requires federal approval. Energy East intends to pay $355million and assume $220 million in CTG’s long-term debt (see DailyGPI, July 1). Forty-five percent of CTGResources common stock is to be converted into Energy East commonstock, with a value of $41 in cash per share of CTG. The remainingpercentage of CTG common stock will be converted into $41 in cash pershare. CTG shareholders can choose how much they want in stock and incash, but transaction will be tax-free if they receive Energy Eaststock.
Dallas-based Sulphur River Gathering LP completed theacquisition of four gas processing plants and related gatheringsystems located in East Texas and Arkansas from Dynegy Inc. Theacquired plants include the Eustace plant located in HendersonCounty, TX including the Myrtle Springs, Edgewood, and Gingercompressor stations; the New Hope Plant located in Franklin countyTexas; the East Texas Plant located in Gregg county, Texas; and theTexarkana Plant located in Miller county, Arkansas. These plants,along with over 675 miles of gathering lines, are capable ofprocessing up to 175 MMcf/d of gas. The acquired systems, togetherwith SRG’s previous assets, comprise more than 1,000 miles ofgathering lines, and have processing capacity of more than 250MMcf/d. The combined systems currently gather 150 MMcf/d of gas,recovering 8,000 b/d of gas liquids, 750 long tons per day ofsulphur and 2,500 b/d of condensate.
Wiser Oil said yesterday it has entered into hedges coveringmore than 90% of its estimated oil production in the United Statesand Canada for the year 2000 and 25% of its estimated gasproduction in the United States (or about 5,261 MMBtu/d) fromFebruary through September. The average forward gas market pricefor the hedge period is $2.49, with a volume-weighted average swapprice for three regional indices on which the hedges were done at$2.29. The oil hedges were entered into on a quarterly basis. Forthe first quarter, the company entered into a Nymex WTI oil pricecollar with a floor price of $18.50 and a ceiling price of $26.60covering 1,000 barrels of oil per day. It also entered into a NymexWTI swap at a fixed price of $24 covering 2,700 b/d. For thesecond, third and fourth quarters, it entered into swaps at fixedprices of $22.30, $21.07, and $19.78, covering volumes of 3,500b/d, 3,400, and 3,300 b/d, respectively. CEO Andrew J. Shoup, Jr.said the transactions “give us the ability to commit these cashflows to certain exploration and development projects for the year2000.”
The New York Mercantile Exchange board of directors has approveda “demutualization plan,” which will convert the Exchange from anot-for-profit membership structure to a for-profit organization.The demutualization plan calls for the equity in the exchange toremain with the seat-owners of its Nymex division. “Thedemutualization plan approved last night is a necessary first stepin the repositioning of the exchange to a for-profit business modelthat will provide us with the opportunity to create new businessopportunities, react rapidly and decisively in an increasinglycompetitive marketplace, and explore interest by outsideinvestors,” said Chairman Daniel Rappaport. The plan will besubmitted to the members of the Nymex Division of the Exchange forapproval at a special meeting, most likely during the second orthird quarter of 2000. The Exchange must first obtain clearancesfrom the Securities and Exchange Commission and the CommodityFutures Trading Commission, as well as seek a ruling from theInternal Revenue Service.
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