Updating the progress on its ongoing asset sales program, Tulsa-based Williams reported Friday that it has closed three previously announced transactions involving sales of assets and a power contract for approximately $663 million in aggregate consideration.

“These events show how we are executing on our business plan in a big way,” said Steve Malcolm, Williams CEO. “Asset sales are shaping a new Williams that is financially healthier and commercially focused on selected businesses and markets where we can be a leader in the natural gas arena,”

Williams said it completed the sale of certain exploration and production properties in Kansas, Colorado and New Mexico to XTO Energy for $381 million, of which $341 million cash was received Friday. Williams had already received $40 million as an initial deposit in April. An additional $19 million relates to cash being received by Williams for revenues and preferential right elections since the announcement of the transaction in early April (see NGI, April 14). The total purchase price of the transaction is $400 million.

The deal includes natural gas and coalbed methane producing properties in the Raton Basin of Colorado, the Hugoton Field of southwestern Kansas and the San Juan Basin of New Mexico.

According to XTO Energy’s internal engineers, proved reserves are estimated to be 308 Bcf of natural gas, of which 77% are proved developed. Beginning June 1, the acquired properties will contribute about 60 MMcf/d of gas to the Fort Worth, TX-based company’s growing production base.

“We are proud to complete this timely acquisition. The properties perfectly reflect the characteristics which have built XTO’s legacy asset base today — long-lived production, high operating margins and significant upsides,” stated Bob R. Simpson, CEO. “Going forward, the company is well-positioned to deliver on its strategy of profitable, long term growth through internal development and opportunistic acquisitions.”

For Williams, the transaction represents 11% of its proved reserves, which totaled 2.8 Tcfe at 2002 year-end. Williams estimates its pre-tax gain on the property sale will be between $80-100 million. The deal represents a substantial portion of the exploration and production assets Williams has targeted for sale by year-end. Other assets the company is marketing include certain properties in the Denver-Julesberg, Green River and Uinta basins, as well as Gulf Coast properties.

Williams also reported that it has closed on a full requirements power contract with Jackson Electric Membership Corp. to Progress Energy for $175 million cash, plus an additional $13 million as requirements related to the transitioning of operations to be met by August 15 (see NGI, March 24).

In addition, Williams completed the sale of its equity interest in Williams Bio-Energy LLC to a new company formed by Morgan Stanley Capital Partners. Following adjustments to the $75 million purchase price pursuant to the purchase and sale agreement, Williams received $59 million in cash. The sale included ethanol production plants in Pekin, IL, and Aurora, NE.

Including Friday’s closings, Williams said it has received roughly $2.1 billion of the expected $2.75 billion cash from asset sales that have been closed or announced this year. The balance is scheduled to be received throughout the second quarter. “We are using these sources of cash to manage our company and its liquidity closely, carefully and thoughtfully,” said Malcolm. “These proceeds help us reduce debt and improve our balance sheet to support our natural gas production, processing and pipeline assets.”

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