US-based oil and gas company Energen has agreed to sell its Alabama Gas (Alagasco) natural gas utility business for $1.6bn in proceeds, allowing it to become a pure exploration and production company.
A definitive stock purchase deal was signed between Energen and purchaser The Laclede Group, where the total transaction value is subject to customary closing adjustments, comprising of $1.28bn in cash and around $320m in debt.
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After consideration of accelerated intangible drilling costs, Energen’s after-tax proceeds are estimated to be $1.1bn.
The US explorer is set to use the cash proceeds to immediately cut short-term indebtedness, enhancing the financial capacity of the company and potentially accelerating the pace of drilling and development of its Permian basin assets in 2015 and beyond.
Energen chairman and chief executive officer James McManus said that the transaction allows the company to clarify its corporate structure by becoming a pure exploration and production company.
"Laclede has a longstanding focus on customer safety and reliability and will extend its excellent customer service tradition in its new service area in Alabama," McManus added.
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By GlobalData"Laclede also is culturally committed to continuing Alagasco’s legacy as an active participant in advancing Alabama’s economic development efforts and supporting civic and charitable activities."
The transaction is expected to end this year.
Image: Energen to accelerate the pace of drilling and development of its Permian Basin assets in 2015 and beyond. Photo: courtesy of Allan D. Hasty.
