By the OGJ Online Staff
HOUSTON, Oct. 12 -- Mirant Corp. CEO Marce Fuller Friday said this week's natural gas acquisitions "integrate perfectly" into the independent power producer's generation portfolio by providing assured physical gas supply many times its own needs.
Thursday, Mirant said it will buy TransCanada's gas marketing unit and an interest in 18 gas and oil producing fields from Castex Energy Inc., Houston. The Atlanta company reported the $162 million deal includes 206,000 acres of mineral rights in South Louisiana and a number of Castex affiliates.
Mirant said it was also acquiring TransCanada PipeLines Ltd.'s money-losing gas marketing unit for an undisclosed sum in a deal that will make Mirant one of North America's largest gas marketers.
Under the agreement, Mirant will buy TransCanada's trading and marketing business and related gas transport and storage contracts. Mirant will also acquire TransCanada's "netback pool," which markets supply from 550 Canadian producers.
TransCanada put its marketing and trading unit on the block earlier this year. It took a $90 million (Can.) charge in the second quarter to account for gains or losses when it was sold as well as the unit's financial results.
The acquisition puts Mirant in a favorable position in Canada where gas demand for power generation is expected to grow tremendously, Fuller said. "In particular, we are in a good position to market gas from Canada and Alaska," she said.
The acquisitions round out Mirant's gas asset portfolio with positions in every supply basin and all major city gate delivery points, said Fuller. The two acquisitions will boost Mirant's gas volume 30-40%, Fuller said. The company will have 5.6 bcfd under management, 8 bcfd in gas transportation, and 50 bcf of storage under its control, after the deals close.
Fuller said the Castex acquisition is expected to add 4�/share to 2002 earnings. Mirant -- through its indirect wholly owned subsidiary Mirant Americas Production Co. -- now owns an estimated 96 bcf of proven oil and gas reserves, 82% of which are natural gas.
A substantial portion of current production is contracted to be sold at an average fixed price of $4/MMbtu through 2002.
Castex, a privately held Houston-based oil and gas producer, will retain an interest in the properties and will continue to operate them. Fuller said the acquisition also will produce added mineral royalty and bonus revenues from an interest in more than 206,000 acres of fee lands, where the rights are to the surface and minerals.
Additionally, Fuller said Mirant and Castex have identified more than 200 low-risk opportunities where new wells can be drilled or where production at existing wells can be extended, allowing the companies to develop additional reserves.
She said Mirant will continue to look for other opportunities "like Castex," but any deals will have to support the company's business plan.