Texas Eastern Corp.'s oil and gas production and exploration units will be sold for about $1.4 billion to a British concern to help finance a friendly takeover by Panhandle Eastern Corp., Panhandle announced Wednesday.
The agreement with Enterprise Oil PLC was reached just days after the two Houston natural gas companies signed a $3.2-billion merger agreement.
“They were able to reach this deal so quickly because the sale to Enterprise had been under consideration by Texas Eastern before Panhandle Eastern made its offer to acquire the company,” Panhandle Eastern spokesman Jim Hart said.
The sale to Enterprise Oil includes Texas Eastern’s holdings in the British and Norwegian sectors of the North Sea, Denmark, Indonesia, the Netherlands and Alaska, Panhandle Eastern said.
The holdings include 13 producing oil and gas fields, six fields that are under development and 14 undeveloped fields.
Enterprise Oil is an independent oil and gas exploration and production company, according to a notice of the proposed acquisition. If the purchase is approved, Enterprise said it will become the leading independent oil exploration and production company in the North Sea in terms of reserves, production and acreage.
Panhandle Eastern’s Feb. 20 merger agreement included a provision to sell non-pipeline assets to help finance the acquisition. Panhandle Eastern officials said the sale announced Wednesday was a big step toward that goal.
Robert D. Hunsucker, chairman, president and chief executive of Panhandle Eastern, said his company approved the sale under terms of the merger agreement.
Hunsucker said Panhandle Eastern expected the sale to net more than $1.2 billion after taxes, with proceeds to be used to help pay off most of $1.7 billion in short-term loans taken out for the Texas Eastern buyout.
“The $1.4-billion sale price meets our expectations and is completely in line with what our financial analysis revealed,” Hunsucker said in a statement.
The sale is expected to be complete in 60 to 90 days, officials said, and is subject to approval by Enterprise Oil shareholders and the British government.
Texas Eastern and Panhandle Eastern officials said last week that Texas Eastern’s 44% share in Petrolane Partners of Long Beach also could be sold within 60 days after the merger is complete.
The master limited partnership, formed through the company’s Petrolane Inc. subsidiary in 1987, serves the international liquid petroleum gas market.
Panhandle Eastern is financing 80%, or $2.6 billion, of its $3.2-billion takeover along with $1.05 billion in refinancing and working capital, Hart said.