EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.
GROUP ANNOUNCES SALE OF TEXAS NATURAL GAS BUSINESS
Houston, TX – The PG&E National
Energy Group today announced that it has signed a definitive stock
purchase agreement to sell its Texas natural gas and natural gas
liquids business to El Paso Energy Field Services Company, a subsidiary
of El Paso Energy Corporation (NYSE:EPG). The value of the transaction
to the National Energy Group is approximately $903 million, which
includes debt with a book value of $624 million associated with
the operations of PG&E Gas Transmission, Texas Corporation and PG&E
Gas Transmission Teco, Inc. The transaction will be accretive to
the National Energy Group’s earnings in the year 2000 and beyond.
The holdings, which consist
of 8,500 miles of natural gas and natural gas liquids pipeline,
nine natural gas processing plants, and natural gas storage facilities,
are all located in Texas.
"The market prices for natural
gas transportation and natural gas liquids, combined with the price
we paid to acquire these businesses, resulted in a significant drag
on earnings despite recent improvements in operational and financial
performance," said Thomas G. Boren, President and CEO of the National
Energy Group. "This transaction will eliminate a negative impact
on our earnings and will help the National Energy Group achieve
its financial goals by 2002."
The transaction is expected
to close by mid-year 2000. The sale of these businesses, which have
total assets of $2.5 billion, will result in a one-time charge against
1999 earnings of $890 million, or $2.42 per share that, pursuant
to accounting requirements, will be reflected in the National Energy
Group’s financial results of operations for 1999.
"We continually review the
operational and financial performance of our competitive businesses,
assessing their ability to deliver shareholder value," said Boren.
"When assets or businesses such as this one aren’t expected to deliver
shareholder value, we will act decisively to move them out of our
portfolio. This transaction frees up human and financial resources
we will use to grow our National Energy Group."
Lehman Brothers is acting
as financial advisor for the transaction and Andrews & Kurth, L.P.P.
is acting as legal advisor.
The National Energy Group,
which includes non-utility generation, natural gas pipelines and
energy trading and services businesses in 27 states and Canada,
had 1998 revenues of almost $12 billion and $10 billion in assets.