Triana Energy Holdings, an exploration and production company based in Charleston, W.V., has agreed to purchase all the stock of CER for $330 million in cash. Triana also has agreed to deliver the approximately 94 billion cubic feet (Bcf) of natural gas remaining under forward sales contracts through 2006. The sale is expected to be completed in the third quarter of 2003.
Together with the previously announced sale of certain properties in New York State, NiSource will have sold its E&P business for approximately $425 million in cash plus the assumption of the gas delivery obligations remaining under forward sales contracts. NiSource's E&P business will be accounted for as discontinued operations as of June 30, 2003.
The sale to Triana will result in approximately $220 million in after-tax cash proceeds that will be used to pay down debt. An after-tax book loss of approximately $335 million on the sale will be recognized by NiSource, largely reflecting the taxes incurred from the sale and the difference between the current carrying value of CER stock and the purchase price.
"Today's agreement completes our plan to divest our E&P assets and is consistent with NiSource's strategy to focus on our core, regulated assets," said Gary L. Neale, NiSource chairman, president and chief executive officer. "CNR has been an important contributor to NiSource and is valued in the marketplace for its producing assets.
"In Triana and Morgan Stanley Capital Partners, we have found a well-capitalized buyer experienced in the Appalachian basin," Neale added. "We believe that including today's sale, the New York State transaction and applying current market value to the 94 Bcf of gas to be delivered against the remaining forward sales obligations, we have obtained the equivalent of approximately 85 cents per thousand cubic feet (Mcf) for our Appalachian E&P assets.
"When this sale is complete, NiSource will have exited most of our non-regulated businesses. Virtually all of our operating income will be derived from our core, regulated assets," Neale said. "This is consistent with our business strategy and our goals to reduce our corporate risk profile and strengthen our balance sheet."
Neale noted that NiSource has paid down $1.6 billion in debt since December 2001 with cash from operations, proceeds from the sale of non-strategic assets and the issuance of common stock.
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