A KeySpan Corp. affiliate announced Friday it is offering all of its remaining 6,580,392 shares of common stock of the Houston Exploration Co., equating to a 24% interest, in a public offering, completing KeySpan’s plan announced more than a year ago to sell out of the E&P company it founded in the 1980s and focus on regulated assets in the East.
The shares will be offered to the public at $56.25 per share. Houston Exploration’s stock closed Friday at $56.90 a share. Houston Exploration will not receive any proceeds from the sale of KeySpan Corp.’s shares in the offering.
In May, Brooklyn-based KeySpan successfully completed a $449 million exchange transaction with Houston Exploration that reduced its ownership from 55% to 24% (see Daily GPI, May 26). Under the terms of the transaction, KeySpan exchanged 10.8 million shares of Houston Exploration common stock for all the stock of Seneca-Upshur Petroleum Inc., a wholly owned subsidiary of Houston Exploration. Houston Exploration retired 4.6 million shares and issued 6.2 million shares in a public offering.
KeySpan Chairman Robert B. Catell told analysts at a Merrill Lynch conference last fall the utility company was planning to sell its remaining interest for the right price “if we can do it in a tax efficient way” (see Daily GPI, Sept.19, 2003). KeySpan CFO Gerald Luterman explained that Houston Exploration had a zero tax basis and a book value of about $600 million. If, for instance the stock had been sold at its then current $34 stock price, KeySpan would have realized only $23 to $24, with the rest going in taxes, Luterman said. The difference was worth about $200 million to KeySpan stockholders.
KeySpan had sold 10% of its interest for nearly $80 million earlier in 2003, through a stock deal which incurred no taxes (see Daily GPI, Feb. 24).
Houston Exploration’s core areas of operations are in South Texas, the shallow waters of the Gulf of Mexico, the Arkoma Basin, and the Rocky Mountains. As of the end of 2003, the company’s net proved reserves were 755 Bcfe, of which approximately 94% are natural gas. About 68% of the reserves were classified as proved developed.
All shares will be offered by KeySpan Corp. under Houston Exploration’s effective shelf registration statement filed with the Securities and Exchange Commission in March 2004. Morgan Stanley & Co. Incorporated is the sole manager for the offering.
A registration statement related to the public offering has been filed with and declared effective by the Securities and Exchange Commission, and a prospectus supplement related to the public offering will be filed with the Securities and Exchange Commission. When available, copies of the prospectus supplement relating to the offering may be obtained from the offices of Morgan Stanley & Co. Incorporated, Attention Prospectus Department, 1585 Broadway, New York, NY 10036.
©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |