Buying

Enron Capital & Trade Resources (ECT) agreed to acquireCogen Technologies’ interests in three power plants for $1.1billion and the assumption of about $350 million in non-recoursedebt. ECT will make the acquisition through a special purposeentity in which ECT will own a 50 percent interest. The entity willinvest up to $130 million in equity, with the balance of thepurchase price funded by non-recourse borrowings provided byfinancial institutions. The transaction is expected to close inearly 1999.

Calpine Corp. power marketing affiliate Calpine Power Servicessigned a one-year sales agreement with LG&E Energy Marketing(LG&E) to provide 150 MW from Calpine’s Texas power systembeginning January 1999. Calpine’s Pasadena Power Plant will provide140 MW of electricity, with the additional 10 MW coming from thecompany’s Texas City and Clear Lake facilities. With thisagreement, Calpine has now sold all of the power from its existingPasadena facility through 2001.

Massachusetts’ Eastern Enterprises clearly has embraced theconcept of consolidation and is doing deals to prove it. Fresh fromits acquisition of Essex County Gas, the Boston Gas parent lastweek said it will buy nearby Colonial Gas Co. for nearly half abillion in stock, cash, and assumed debt. The deal grants a 27%premium to Colonial’s closing price preceding the deal’sannouncement.

The futures market continued its rally on Friday, fed on asteady diet of short-covering and local buying ahead of the holidayweekend. Early gains posted by the October contract led to a quickspike to the $1.86 level before light position squaring trimmedadvances before the closing bell. That left the prompt contract upa respectable 7.1 cents to settle at $1.783. October was not alone,November and December each more than matched October’s gains,increasing 7.6 cents and 7.3 cents, respectively.

Follow-through buying took hold of Nymex trading early, and ledto new session highs before the closing bell last Friday as Julygained 9.9 cents to settle at $2.17. July gapped higher on the openafter coming into the day with solid momentum following Thursday’smodest gains in both the regular and ACCESS trading session. Julyopened at 2.115 Friday, already 4.4 cents above Thursday’s settle.A warming trend for both the weekend and extending into the 6-10day forecast in the South, coupled with some technical momentumwere universally cited as reasons for the strength.

Midcoast Energy Resources is buying two short pipeline systemsfrom Koch Gateway to serve new demand for marketing andtransportation in the Baton Rouge, LA, area. The systems will beacquired by Midcoast’s wholly owned subsidiaries, Mid Louisiana GasCo. (MLG) and Mid Louisiana Gas Transmission Co. (MLGT) for $2.6million cash. Midcoast will assume operations June 1, with closinganticipated during the third quarter, subject to approval by theFederal Energy Regulatory Commission and appropriate Louisianaagencies.

Consolidated Edison and Orange and Rockland Utilities agreed tomerge with ConEd acquiring all the common stock of O&R for$58.50 per share in a deal worth about $790 million. O&R wouldbecome a wholly owned subsidiary of ConEd. The transaction would beaccounted for as a purchase and is expected to be accretive toConEd’s earnings per share after the first year.

Under pressure at FERC for buying such a large chunk (40%) ofthe firm transportation capacity to California on El Paso NaturalGas, NGC Corp. announced late yesterday it is releasing 593,122MMBtu/d, or about 40% of the capacity it holds on the pipeline fora one-month term. It is the first quantity of transportationcapacity NGC has released since its negotiated contract with ElPaso became effective Jan. 1 and may appear to be a response toprotesters who have accused the marketing firm of withholdingwestbound capacity in order to prop up capacity prices. “It’spressure from the hearings at FERC last month,” said one observer.A spokeswoman had no comment on why the firm was releasing thecapacity. Demand remains strong in California despite the start ofa shoulder month. “Our goal is not to corner the market but ratherto use what we can,” one NGC marketer said cryptically.

FirstEnergy Corp. and Belden & Blake Corp. agreed to createa joint venture called FE Holdings to acquire natural gasproperties. The companies also agreed to buy privately held MarbelEnergy Corp., a fully integrated natural gas company. “The creationof FE Holdings – with access to low-cost, high-quality explorationand production capabilities combined with utility distribution andtransportation facilities – will produce tremendous opportunitiesfor our company, customers and shareholders,” said FirstEnergy CEOWillard R. Holland. “The ability to offer customers bothelectricity and natural gas, as well as a wide range of otherenergy-related products and services, will further enhance ourposition as a strong competitor in the evolving energy industry.”