Triana Energy Holdings Inc., Charleston, W.Va., reached agreement to buy Columbia Energy Resources and its Appalachian basin gas properties from NiSource Inc., Merrillville, Ind., for $330 million in cash.
The purchase consists of Columbia Natural Resources and its 1.1 tcf of natural gas reserves. Triana is an affiliate of Morgan Stanley Capital Partners.
NiSource, which acquired the properties when it bought Columbia Energy Group in 2000 for $8.5 billion (OGJ, Mar. 6, 2000, p. 34), will exit the E&P business upon closing in the third quarter of 2003.
At the time, W. Henry Harmon, Richard W. Beardsley, and other officials of CNR formed Triana Energy, an exploration and production company. Triana's energy team is largely responsible for redefining the Appalachian basin with the discovery of several major gas and oil plays in deeper geological formations than had been widely penetrated earlier.
Triana also has agreed to deliver to NiSource the 94 bcf of gas remaining under forward sales contracts through 2006.
Including the Triana deal and the previously announced sale of New York State properties, NiSource will have sold its E&P business for $425 million in cash plus the assumption of the forward gas delivery obligations. The sale to Triana will result in $220 million in after-tax cash proceeds that will be used to pay down debt.
NiSource will recognize an after-tax book loss of $335 million on the sale that largely reflects taxes incurred from the sale and the difference between the current carrying value of CER stock and the purchase price.
Triana said its focus is on defining new prospects and developing properties in the Appalachian basin. No asset, revenue, reserves, or production data were available for the private company. A Triana spokesman declined to discuss the pending transaction or the company's plans after closing.
The company's website notes that Triana's geoscience team "is recognized as a leader in deep exploration throughout the Appalachian basin." The team developed important gas plays in the Ordovician Rose Run formation in Ohio (OGJ, Jan. 23, 1995, p. 61), the Ordovician Trenton-Black River formation in New York and West Virginia (OGJ, Nov. 8, 1999, p. 81), and the Devonian Oriskany formation in West Virginia (OGJ, July 30, 1979, p. 128).
Beardsley, with more than 30 years' experience in the basin, is "widely recognized as the premier geophysicist in the region," Triana said. He is "singularly attributed with the discovery and definition of the Eastern Overthrust, a leader in the development of the Rose Run features in Ohio, and the significant Trenton-Black River discoveries which are now redefining the potential of this basin."
Triana said Beardsley has assembled a close-knit team that is aggressively identifying deep prospects throughout the eastern US.