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Shell to acquire Tejas Gas Corp.

Sept. 29, 1997

Shell Oil Co. has agreed to acquire Houston's Tejas Gas Corp. in a deal valued at $1.45 billion. The move is the latest in a string of such deals involving natural gas businesses (OGJ, Apr. 21, 1997, p. 19). Under terms of the agreement, Shell will acquire all of Tejas's outstanding common stock for $61.50/share in cash and assume balance sheet debt and preferred stock of about $900 million. The Tejas board of directors has recommended the deal to its stockholders.

Shell Oil Co. has agreed to acquire Houston's Tejas Gas Corp. in a deal valued at $1.45 billion.

The move is the latest in a string of such deals involving natural gas businesses (OGJ, Apr. 21, 1997, p. 19).

Under terms of the agreement, Shell will acquire all of Tejas's outstanding common stock for $61.50/share in cash and assume balance sheet debt and preferred stock of about $900 million. The Tejas board of directors has recommended the deal to its stockholders.

A group of Tejas stockholders and management that holds 19% of the outstanding common stock agreed to vote in favor of the transaction, according to Shell. The transaction is expected to close by yearend.

Shell will combine its natural gas midstream business with Tejas, one of the largest owners and operators of intrastate gas pipelines, processing plants, and storage facilities in Texas, Oklahoma, and Louisiana.

Shell's midstream gas business consists of offshore and onshore pipelines, gas processing and NGL fractionation plants, and transportation and marketing assets in Texas, Louisiana, Mississippi, and the Gulf of Mexico.

The merger furthers the already entwined gas businesses of the two companies.

In 1995, Shell and Tejas formed Coral Energy Resources LP. Coral then forged a natural gas marketing alliance with Shell Canada Ltd., under which Coral markets 800 MMcfd of Shell Canada's gas production (OGJ, June 9, 1997, p. 29).