COLUMBIA GAS TO SELL CANADIAN, LNG UNITS
Financially plagued Columbia Gas System Inc. has agreed to two major asset sales totaling more than $200 million.
CGS signed a conditional agreement to sell its Columbia LNG Corp. unit to Shell Oil Co. unit Shell LNG Corp. for $128.5 million. Columbia LNG owns the Cove Point, Md., liquefied natural gas import terminal.
CGS also agreed to sell its Canadian unit Columbia Gas Development of Canada Ltd. (CGDC), Calgary, to Anderson Exploration Ltd., also of Calgary, for $109.3 million (Canadian).
CGS and its Columbia Gas Transmission Corp. unit earlier this year filed for protection under Chapter 11 of the U.S. federal bankruptcy code after getting caught in a squeeze between plunging spot market gas prices and high costs of purchased gas covered by longstanding take or pay contracts with producers (OGJ, Nov. 11, p. 24).
Both purchases must be approved by the bankruptcy court as well as other regulatory approvals and closing conditions.
LNG UNIT
Under the tentative agreement, Shell LNG also would arrange refinancing of Columbia LNG's outstanding debt to CGS to permit repayment of about $44 million at final closing.
If several substantial conditions are met, Shell LNG will purchase 40.8% of Columbia LNG's stock for $45.75 million at an interim closing in July 1992 and another 50% of the stock for $64.25 million at a final closing expected in March 1993. Shell LNG earlier paid CGS $18.5 million for 9.2% of Columbia LNG stock.
The Cove Point terminal is the biggest in the U.S. with a design sendout capacity of 1 bcfd of regasified LNG. Constructed in the 1970s, the terminal has been maintained on standby status since 1980.
CANADIAN UNIT
CGDC holds more than 319,000 net acres of oil and gas leases in Alberta, Saskatchewan, British Columbia, and the Yukon.
Its reserves total 5.5 million bbl of oil and natural gas liquids and 149 bcf of gas.
In the fiscal year ended Sept. 30, Anderson produced an average 5,428 b/d of liquids and 77 MMcfd of gas.
CGS said the sale will enable it to focus exploration and development efforts on its extensive U.S. operations.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.