Tejas Gas Corp., Houston, is headed for a big expansion of its U.S. natural gas operations.
The company has signed a definitive agreement to acquire Transok Inc., Tulsa, from Central & South West Corp. (CSW), Dallas, for about $690 million.
CSW said Transok is one of the largest intrastate gas pipeline systems in the U.S. and the largest gas processor in Oklahoma. Founded in 1955, it became a first tier subsidiary of CSW in 1982.
The agreement calls for a merger of Transok and a newly created subsidiary of Tejas. The companies expect to complete the transaction, subject to regulatory and closing requirements, during the second quarter.
As part of the agreement, Transok will retain about $200 million of debt.
Acquired assets
Transok operations cover gas gathering, processing, transmission, storage, and sales. Assets include:
- More than 6,500 miles of gathering and transmission lines in Oklahoma, Louisiana, and Texas.
- 2.3 bcfd of pipeline capacity.
- Eight operating processing plants with total capacity of 564 MMcfd.
- A 26 bcf capacity storage site with 300 MMcfd of withdrawal and 200 MMcfd of injection capacity.
- 1.4 tcf of connected third-party gas reserves.
Following the merger, Tejas will have 155 bcf of storage capacity, along with about 12,000 miles of intrastate pipelines in Texas, Oklahoma, and Louisiana. Total pipeline capacity will be more than 7.8 bcfd and combined average throughput in excess of 4.5 bcfd.
The combined system will have more than 290 interconnections with other intrastate and interstate gas pipelines, linking significant supply areas with major markets.
Tejas will become a major producer of natural gas liquids with addition of Transok gas processing plants, located on the Transok pipeline system. Total combined liquids processing capacity for Tejas and Transok operating plants will be more than 725 MMcfd and 50,000 b/d of liquids.
Transok's average system throughput was 1.3 bcfd during first quarter 1996 and 1.4 bcfd in 1995. Liquids production was 25,100 b/d during first quarter 1996 and 22,400 b/d in 1995.
Tejas' average system throughput was 3.5 bcfd during the first quarter of 1996 and 3.1 bcfd in 1995. Its liquids production was 3,200 b/d during first quarter 1996 and 4,300 b/d in 1995.
The acquisition will allow Transok to provide major new sources of gas supply to Coral Energy Resources LP, a Tejas energy marketing venture with Shell Oil Co.
CSW's plans
CSW intends to use part of the proceeds from the sale to repay an equity bridge loan obtained when it acquired Seeboard plc, a British regional power company. The rest will be used for general corporate purposes.
CSW last January disclosed plans to assess strategic alternatives for Transok. The company said it undertook the review of Transok because "regulatory constraints" prevented it from fully realizing Transok's potential value.
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