Dominion Closes on Two Onshore E&P Sales for $6.5 Billion
Dominion has closed on two separate sales of U.S. onshore natural gas and oil exploration and production operations for a total of approximately $6.5 billion. These operations include 3.51 trillion cubic feet equivalent (Tcfe) of proved natural gas and oil reserves as of Dec. 31, 2006.
In the transactions completed today: -- HighMount Exploration & Production LLC, a newly formed subsidiary of Loews Corporation (NYSE: LTR - News), purchased Dominion's operations in the Permian Basin, Michigan and Alabama for approximately $4.0 billion. These operations include reserves of approximately 2.5 Tcfe on Dec. 31, 2006. -- XTO Energy Inc. (NYSE: XTO - News) purchased Dominion's operations in the Rocky Mountains, San Juan Basin and the Gulf Coast region for approximately $2.5 billion. These operations include proved reserves of approximately 1 Tcfe on Dec. 31, 2006.
Proceeds from the sales will be used to repurchase stock under the company's outstanding tender offer that expires on Aug. 7, unless extended. With these sales, Dominion has closed on more than 85 percent of the natural gas and oil reserves the company plans to sell. In June, Dominion reached an agreement to sell the other 15 percent, approximately 780 billion cubic feet equivalent (Bcfe), to Linn Energy, LLC for approximately $2.05 billion. That sale is expected to close by the end of the third quarter 2007, subject to customary closing conditions and adjustments. When it is completed, Dominion will have sold about 5.5 Tcfe for approximately $13.9 billion.
As previously announced, Dominion will retain its Appalachian E&P operations, which include approximately 1 Tcfe of proved reserves as of Dec. 31, 2006. Those operations are lower risk and fit well strategically with Dominion's natural gas gathering, pipeline and storage system.
Dominion was advised in the two sales announced today by the investment banking firms of JPMorgan, Lehman Brothers and Juniper Advisory L.P. The company's legal advisers were BakerBotts LLP and McGuireWoods LLP.
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