Fluor to Sell Energy Assets at Below Book

Fluor Corp. said Thursday that it has agreed to sell its remaining oil and gas operations to a subsidiary of Houston Industries Inc. for $190 million, almost 25% below book value.

The deeply discounted price underscores Fluor’s drive to shed what it calls non-essential businesses to eliminate expenses while raising cash to reduce its debt.

The sale moves the giant, Irvine-based engineering and construction company a step closer to completion of the “asset redeployment” plan that it announced more than a year ago amid mounting financial woes.

Fluor officials said the sale of Denver-based Fluor Oil & Gas to Primary Fuels Inc. will represent the second-largest divestment of assets under the redeployment plan, which company officials hope will lead to improved profits. In August, Fluor sold its 162-acre Irvine corporate headquarters site to Trammell Crow Co. of Dallas for $340 million.

Completed by Oct. 31

The final price for the oil operations subsidiary will not be known until negotiations end, Fluor said. The company also said the sale cannot be completed until Oct. 31, the end of a 30-day waiting period required by law. According to Fluor, net proceeds from the sale will be about $170 million and will be used to reduce company debt.

Despite lower year-to-year revenue in 1984, Fluor’s oil and gas operations resulted in net earnings of $29.5 million, compared to $15.7 million in 1983.

Nevertheless, sale of the profitable oil and gas operations “will allow greater concentration on Fluor’s two core businesses, engineering and construction and natural resources management,” Fluor Chairman David S. Tappan said. “It also improves cash flow by eliminating capital expenditure requirements associated with oil and gas investments.”

Glen Walker, a spokesman for Houston Industries, said output from the oil and gas operation will be used to power generating plants owned by another of its subsidiaries, Houston Lighting & Power.

$8.6-Million Profit

“It will provide additional oil and gas reserves for Houston Lighting & Power, but the primary reason (for the purchase) was that it was a good deal,” he said, noting that Fluor has agreed to a price that is about $60 million below book value.

Fluor officials said the sale of the subsidiary at the discounted price will result in a fourth-quarter charge against earnings of about $60 million after taxes.