Mobil, PanEnergy eye downstream gas deal
Mobil Corp. and PanEnergy Corp., Houston, last week disclosed that subsidiary companies have signed a letter of intent to negotiate the sale of Mobil's U.S. natural gas gathering and processing assets to PanEnergy.
Under the proposed agreement, PanEnergy would acquire about 2,600 miles of pipeline as well as Mobil's seven operated natural gas processing plants and fractionation plants in Texas and Oklahoma. PanEnergy also would acquire substantially all of Mobil's equity interests in 17 other gas gathering and processing assets operated by other companies in Texas, Utah, Louisiana, and Oklahoma.
Pending certain adjustments at closing, Mobil will receive about $300 million for its gas processing assets.
Mobil will process its equity gas production with PanEnergy. Transfer of Mobil's third party gas purchase contracts to PanEnergy would result in a reduction of about 25,000 b/d of natural gas liquids production to Mobil. However, there will be no effect on Mobil reserves.
In a separate but related move, the two parent companies disclosed they are negotiating formation of an energy marketing venture between Mobil Natural Gas Inc. and PanEnergy's gas marketing unit. Mobil Natural Gas markets 3.6 bcfd.
Once merged, the new marketing venture will be the third largest gas marketing operation in North America, with sales of more than 7 bcfd.
The principals said the new operation also will be well positioned to compete in electrical power marketing.
Terms of the letter of intent call for Mobil to own a 40% interest in the new entity, with PanEnergy controlling the remaining 60%.
Both companies expect to close the transaction during the second quarter after signing of a definitive agreement by the end of March.
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