Briefs

In an agreement to ensure the sale of CrossCountry Energy is approved, Enron Corp. has agreed to increase the funding of pension plans for about 17,000 current and former employees. The agreement resolved litigation with Pension Benefit Guaranty Corp. (PBGC). According to PBGC, Enron has agreed to pay $321 million to cover the underfunding of four of its former benefit plans. Previously, Enron had said paid $200 million would be enough to pay for the fund, but PBGC had threatened to stall the sale of CrossCountry, Enron’s pipeline business, which was approved by the bankruptcy court earlier this month. Enron said it has “resolved” the PBGC objections, and said it would put $321 million into an escrow account to fund the pension.

Enstor Operating Co. LLC said it is accepting bids for firm storage capacity at the Katy Storage Hub that will be available starting April 1, 2005. Non binding bids are due Oct. 29. The Katy Hub is connected to eight Texas intrastate and four interstate pipeline systems. Katy has a total storage capacity of 21 Bcf. Firm storage services of up to five annual cycles will be offered. Enstor also is offering capacity at its proposed Houston Storage Hub, which is expected to be connected to seven interstate and intrastate pipelines. It would provide 10 annual cycles of storage service. Total working storage capacity at the Houston Hub is expected to be 18 Bcf with a maximum deliverability of 1.5 Bcf/d. For more details contact Patrick DeVille at (281) 374-3053 or go to Enstor’s website at www.enstorinc.com.

In an agreement to ensure the sale of CrossCountry Energy is approved, Enron Corp. has agreed to increase the funding of pension plans for about 17,000 current and former employees. The agreement resolved litigation with Pension Benefit Guaranty Corp. (PBGC). According to PBGC, Enron has agreed to pay $321 million to cover the underfunding of four of its former benefit plans. Previously, Enron had said paid $200 million would be enough to pay for the fund, but PBGC had threatened to stall the sale of CrossCountry, Enron’s pipeline business, which was approved by the bankruptcy court earlier this month. Enron said it has “resolved” the PBGC objections, and said it would put $321 million into an escrow account to fund the pension.

Williams has completed the buy-back of nearly $793 million of its debt, but as a result, it will take a third quarter charge on the transaction. The Tulsa-based energy company has been working to cut long-term debt to less than $8 billion by the end of 2005, and at the end of the second quarter, it had pared it to $9.8 billion. The company paid a premium of $135 million over the face value of the $793 million of its 8.6% senior notes, which are due in 2010. Williams bought back 99% of the notes, it said. The third quarter pre-tax charge will total about $155 million for the premium and related fees and expenses. Williams retained Citigroup Global Markets Inc. to serve as the lead dealer manager and solicitation agent. Banc of America Securities LLC, J.P. Morgan Securities Inc., and Lehman Brothers Inc. served as the co-dealer managers and solicitation agents. Global Bondholder Services Corp. served as the information agent for the tender offer.

Calgary-based Esprit Exploration Ltd. is one step closer to reorganizing into an income trust and an exploration and production (E&P) company, and will hold a special shareholder meeting in late September to consider the arrangement. Esprit Energy Trust would hold 90% of Esprit’s existing proved producing reserves, while ProspEx Resources Ltd. would own the balance of the assets and some of the undeveloped lands. In order to become effective, a resolution approving the arrangement must be approved by at least two-thirds of the shareholders. It also will require final approval of the Court of Queen’s Bench of Alberta. If all conditions are satisfied or waived, Esprit, known until last year as Canadian 88 Energy Corp., expects the reorganization to take effect Oct 1. The shareholder meeting is scheduled for Sept. 27 at the Westin Hotel in Calgary.

EnCana Corp. has completed its sale of some heavy-oil assets in east central and southern Alberta to Harvest Energy Trust for US$395 million. The property sale represents about 16,800 boe/d of production after royalties and is made up of predominantly medium- and heavy-oil assets. The sale is part of EnCana’s first tranche of divestitures to reduce its debt. Tristone Capital Inc. served as a financial adviser to EnCana on this transaction.

XTO Energy Inc. said it closed its previously announced purchase of 732 Bcfe of estimated reserves from ChevronTexaco Corp. for $912 million. The “legacy properties” expand XTO’s operations in its Eastern Region, the Permian Basin and Midcontinent area while opening new coalbed methane operations in the Rocky Mountains and a new operating region in South Texas. Beginning Aug. 16, the acquired properties will contribute production of about 88 MMcf/d of gas and 14,000 bbl/d of oil. About 87% of the reserves are proved developed with 47% of the reserves attributable to oil. XTO CEO Bob R. Simpson said the “watershed event sets the stage for years of continued profitable growth.” XTO President Steffen E. Palko said the company anticipates a smooth transition of operations and immediate work on field optimizations. “With the company’s current production growth goal of 28% to 30% this year and 18% to 20% in 2005, we can patiently integrate new drilling inventory into our long-term plans for double-digit organic growth.”

To discourage a hostile takeover, Houston Exploration Co.’s board of directors has adopted a shareholder rights plan that may be exercised if any group — with the exception of 24% shareholder KeySpan Corp. — acquires or announces a tender offer for 10% or more of the company’s outstanding common stock. The “poison pill” plan was not in response to any specific effort to acquire the independent producer, it said in a statement. Rather, it is designed to “assure that all stockholders of the company receive fair and equal treatment in the event of any proposed takeover of the company and to guard against two-tier or partial tender offers, open market accumulations and other tactics designed to gain control of the company without paying all stockholders a fair price.” CEO William G. Hargett said the plan was adopted “in light of recent acquisition activity in our sector, continuing volatility in commodity prices, and the prospect of KeySpan divesting their remaining interest in our company. Given the cyclical nature of our sector these plans are very common and have been adopted by virtually all of our peers, allowing the board of directors to ensure equal and fair treatment of all stockholders in an acquisition context.” In May, KeySpan successfully completed a $449 million exchange transaction with Houston Exploration that reduced its ownership from 55% to 24% (see NGI, May 31).

Peoples Energy Production has purchased 10 Bcfe of proved undeveloped reserves an 10-20 Bcfe of potential additional reserves in East Texas from a private company for $9.5 million. The acquisition includes 5,300 gross acres in the heart of the Cotton Valley/Travis Peak gas trend. Initial development of the acquired reserves, 96% of which are natural gas, will begin in fiscal 2005 with anticipated capital spending on these properties of between $10 million and $15 million of the 2005 capital program, Peoples said. “The acquisition of these properties increases our inventory of low risk drilling opportunities and will help us to achieve our production growth target for fiscal 2005,” said Peoples Energy CEO Thomas M. Patrick. Steven W. Nance, president of Peoples Energy Production said the acquisition “builds on our successful entry into East Texas, a prolific producing province of longer life, low risk reserves, which was accomplished during fiscal 2004.”