Midland

FERC last Tuesday approved El Paso Natural Gas Co.’s bid to sell more than 200 miles of lateral pipelines in West Texas to a Midland, TX-based natural gas provider for an estimated $300,000. At the same time, it approved the request of the buyer, West Texas Gas Inc., to exempt the facilities from FERC jurisdiction under the Natural Gas Act.

FERC on Tuesday approved El Paso Natural Gas Co.’s bid to sell more than 200 miles of lateral pipelines in West Texas to a Midland, TX-based natural gas provider for an estimated $300,000. At the same time, it approved the request of the buyer, West Texas Gas Inc., to exempt the facilities from FERC jurisdiction under the Natural Gas Act.

Southern Union Co. announced that Southern Transmission Co., one of its Texas-based subsidiaries, has sold its Carrizo Springs Pipeline to West Texas Gas Inc., based in Midland, Texas, as part of its cash flow improvement plan. The Carrizo Springs Pipeline consists of approximately 43 miles of eight- and six-inch pipeline and is located in Maverick and Dimmit Counties, Texas. This sale follows a string of non-core asset divestitures over the past year by Southern Union, including, most recently, the sale of its Florida operation in December 2001. These activities are in line with the company’s ongoing cash flow improvement plan — a three-part initiative composed of strategies designed to increase annualized pre-tax cash flow from operations by at least $50 million by the end of fiscal year 2002. Proceeds from non-core asset sales are used toward debt reduction. “As we approach the goal of our cash flow improvement plan, we’re continuing our aggressive non-core asset divestiture activity, allowing us to focus exclusive attention on our natural gas distribution business,” stated Thomas F. Karam, Southern Union president.

Clayton Williams Energy Inc., an independent headquartered in Midland, TX, has closed the sale of oil and gas assets in three East Texas fields to Samson Lone Star Ltd. Partnership. The assets were purchased in 1998 from Sonat Exploration Co. for approximately $46.5 million. Clayton Williams owned 10% of the assets and a subsidiary was general partner for a limited partnership with an affiliate of GE Capital Oil & Gas, which owned the remaining 90%. Under the limited partnership agreement, Clayton Williams’ general partnership interest increased to 35% from 1% after the limited partner received a pre-agreed rate of return. Clayton Williams plans to use the net proceeds from the sale, estimated to be $15.8 million, to reduce its outstanding bank debt and for general corporate purposes. The company also expects to report a third quarter gain of about $10.5 million on the transaction.

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).

Costilla Energy Inc. of Midland, TX, got another reprieve on itsdebt repayment when its bank credit facility was amended providingfor an extension of the $10.2 million principal payment until June18. The payment was due yesterday after a previous extension. Theindependent oil and gas company is in the process of divesting itsRocky Mountain oil and gas properties.

Costilla Energy Inc. of Midland, TX, is examining its optionsafter lenders extended until June 1 a $10.2 million mandatoryprincipal payment due a bank credit facility. Petrie Parkman &ampCo. was hired to weigh potential deals.

Costilla Energy Inc. of Midland, TX, is examining its optionsafter lenders extended until June 1 a $10.2 million mandatoryprincipal payment due a bank credit facility. Petrie Parkman &Co. was hired to weigh potential deals.

Midland, TX-based Costilla Energy Inc. and ONEOK Inc. formed astrategic alliance to capitalize on properties Costilla plans toacquire from Pioneer Natural Resources Co. as well as otherpotential transactions. Tulsa, OK-based ONEOK will participate inCostilla’s previously announced $335 million acquisition of oil andgas properties from Pioneer (assuming it is successful) through anequity investment in Costilla preferred stock.