Finance/Companies news briefs, May 23

Salomon Smith Barney ... TXU Europe ... Hidroelectrica del Cantabrico ... Union Fenosa ... Star Gas Partners � Erickson Oil � Ledwith Oil � Columbia Energy Group � IMPCO Technologies

May 23rd, 2000


Investment firm Salomon Smith Barney Inc. said strong gains in exploration and production companies' stocks last week were underscored by strong commodity prices. "Nothing appears on the horizon that would induce a sharp retreat by either commodity any time soon," said the firm. It recently raised its Year 2000 composite spot natural gas forecast to $3.25/MMbtu in response to lower gas storage injections (see OGJ Online story, May 21: Price outlook for natural gas gets brighter). Salomon Smith Barney said WTI crude prices are hovering about $30/bbl and mentioned concerns about US gasoline prices as an important price driver. Given that Organization of Petroleum Exporting Countries members have not indicated they will raise production at the June 21 meeting in Vienna, the firm predicts oil price for the rest of the year will average about $23/bbl. These two vital dynamics suggest continued potential strong performance by E&P stocks, says the firm.

TXU Europe, a wholly owned subsidiary of TXU, agreed to lift the "poison pill" preventing another buyer from taking control of Hidroelectrica del Cantabrico (HdC). TXU Europe Chief Executive Phil Turberville said, "When we took our initial 5% stake in [HdC] in 1998, we made a commitment to support three principal objectives: to maintain [HdC's] regional identity, to deliver high growth, and to maintain its independence from other Spanish electricity companies. Our offer to purchase 100% of the share capital of the company, made on Mar. 13, 2000, was fully consistent with these objectives in light of potential changes to the share ownership at that time. Subsequently, we withdrew our offer, and a higher offer from Union Fenosa was approved by the CNMV [Spanish securities exchange] on Apr. 19, 2000. Now that the deadline for counterbids has passed, it is our view that to oppose the lifting of the poison pills would not be in the best interest of HdC. It would create a stalemate within the [company's] board that would not serve the interests of the company, its employees, or the shareholders of TXU. TXU's commitment to the Spanish market remains as strong as ever, and we will look at new opportunities for developing our business across Iberia."

Star Gas Partners LP, Stamford, Conn., on Friday said it is acquiring two home heating oil companies, Erickson Oil of Warwick, RI, and Ledwith Oil of Lynbrook, Long Island, NY, for about $6.5 million. The acquisitions brings the number of home heating oil companies acquired by Star Gas to 11, all of which represent approximately 31 million gal of annual volume. Erickson and Ledwith have combined total annual volume of about 7.9 million gal and serve about 9,600 customers. The two purchases represent "very high quality home heating oil businesses in core markets that Star's Petro heating oil subsidiary has historically served," said Irik Sevin, CEO of Star Gas.

Columbia Energy Group, Herndon, Va., reported it has decided to sell its Columbia Petroleum Corp. and Columbia Propane Corp. subsidiaries. The fifth largest propane marketer in the US with operations in more than 30 states and nearly 350,000 customers, Columbia Propane, based in Richmond, Va., has sales of about 270 million gal/year. Richland, Pa.-based Columbia Petroleum engages in retail and wholesale petroleum product sales, transportation, and branded gasoline distribution. Its petroleum sales are about 320 million gal/year. Columbia Energy officials said plans for the divestitures resulted from an ongoing evaluation of assets that determined they were not consistent with Columbia's long-term strategy.

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