Chevron Corp. and NGC Corp., Houston, have agreed on terms of a merger that will create North America's largest gas and natural gas liquids marketer.
The two companies late last month said they had signed definitive agreements to combine NGC's operations with most of Chevron's Houston gas business unit and all of Chevron unit Warren Petroleum Co., Tulsa, except Warren's Venice, La., gas processing complex.
All that remains to complete the deal, announced last January, is receipt of regulatory approvals and satisfaction of a handful of other conditions. Parties to the transaction expect a third quarter 1996 closing.
Chevron and NGC's two current major shareholders-British Gas and NOVA-each would own about 25% of NGC's common stock after the merger.
Consummating the deal likely will boost NGC's North American gas sales through operating units and affiliates to more than 10 bcfd, up from about 7 bcfd at present. NGC also will become North America's largest NGL processor and marketer, with NGL production of 140,000 b/d and sales of 470,000 b/d.
The new company also will be positioned to compete in North American power markets (OGJ, Jan. 29, p. 44).
Merger structure
Terms of the proposed merger call for Chevron to receive about 38.6 million new shares of common stock and about 7.8 million shares of participating preferred stock in the new company, along with about $300 million in cash and notes, for an overall value estimated at more than $700 million.
The deal will combine NGC's midstream and energy marketing operations with most of Chevron's gas business unit and Warren Petroleum under the NGC name.
In its restructrured form, NGC will market virtually all of Chevron's North American production of gas, NGL, and electricity. The unit also will supply gas, NGL, and/or electricity to Chevron refineries, chemical plants, and other corporate facilities in North America.
NGC's gas division will retain the Natural Gas Clearinghouse name, while NGC's liquids assets, currently operated under the name Trident NGL Inc., will operate as Warren Petroleum.
Apart from the merger, Chevron and NGC are continuing talks about two other proposals that could enhance the deal.
In one, NGC would take responsibility for marketing energy products produced at Chevron's Venice gas processing complex and for managing related commercial aspects. In the other, NGC Canadian affiliate Novagas Clearinghouse Ltd. would be responsible for the Chevron-NGC combine's marketing and commercial activities in Canada.
Copyright 1996 Oil & Gas Journal. All Rights Reserved.