Energen to sell gas utility to Laclede for $1.28 bn

Energen agreed to sell its Alabama natural gas utility to the Laclede Group for $1.28 bn in cash, becoming the latest energy company to shed assets to raise money for exploration and production.

The sale of Alabama Gas is valued at $1.6 bn in total, including about $320 mn of debt, according to a statement from Birmingham, Alabama-based Energen.Energen’s after-tax proceeds are estimated to be $1.1 bn after drilling costs.

Energen will use cash from the deal to reduce short-term debt, allowing it to accelerate drilling in West Texas’ Permian basin. The purchase gives St.Louis-based Laclede, a utility owner that serves 1.13 mn customers in Missouri, the largest gas distributor in Alabama.

The deal “allows Energen to clarify its corporate structure by becoming a pure exploration and production company, a trend being rewarded by the financial markets,” James McManus, Energen’s Chairman and CEO, said in the statement.

The unit, known as Alagasco, serves 422,000 homes and businesses, according to Energen’s website.

Laclede, in a separate statement, said the effective purchase price is $1.34 bn, after taking into account the present value, amounting to approximately $260 mn, of tax benefits from the transaction.

Energen fell 1.4% to $80.37 at the close in New York.Laclede dropped 2.4% to $45.11, the biggest decline since June 20.

The deal is expected to close this year.

Providing useful resources, articles and writings on crude oil, other petroleum products, energy and gas. By Blockline and Associate Ltd Nigeria Ltd, online.