With its affiliated natural gas operations as the primary beneficiaries, Sempra Generation announced Tuesday it completed the sale of its exploration and production (E&P) subsidiary, Sempra Energy Production Co. (SEPCO), to PEC Minerals LP for approximately $225 million in cash. The company said it expected to record an after-tax gain of about $110 million from the sale in the third-quarter as part of discontinued operations.

Sempra said the cash proceeds from the sale will be used to help fund the other capital projects of the parent company, Sempra Energy, including its liquefied natural gas (LNG) receiving terminals, new interstate natural gas transmission pipelines and natural gas storage projects.

SEPCO dates back to the pre-formation time of Sempra Energy coming together with the merger of San Diego-based Enova Corp. and Los Angeles-based Pacific Enterprises, parent to Southern California Gas Co. They began merged operations in June 1998. Pacific Enterprises’ Dallas-based SEPCO has been operating as a subsidiary of Sempra’s merchant generation unit, Sempra Generation.

The new owner, PEC Minerals, is jointly owned by a three-company group — Jetta Operating Co., Trevor Ress-Jones, and Providence Energy Corp. — in the E&P sector. They assume ownership of SEPCO’s assets, which including mineral rights over 570,000 net acres and executive rights to more than 190,000 net acres in 31 states.

Petrie Parkman & Co., a private energy investment banking firm, was Sempra Energy’s financial advisor on the sale.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.