Natural gas firm El Paso Corporation has closed on the sale of certain Gulf of Mexico, onshore, and Texas Gulf Coast properties as a part of its portfolio high-grading efforts.
In total, El Paso has contracted for the sale of an estimated 309 billion cubic feet equivalent (Bcfe) of proved reserves for $752 million in four transactions.
The Gulf of Mexico transaction also included the assumption by the purchaser of future plugging and abandonment liabilities associated with those properties, which were reflected on El Paso’s balance sheet as asset retirement obligations of $93 million as of December 31, 2007.
After closing adjustments, final cash proceeds are expected to be approximately $650 million. The proceeds are being used for the reduction of debt incurred for the acquisition of the Peoples Energy Production Company in September 2007.
Brent Smolik, president of El Paso Exploration & Production Company, said: The sale of these properties, together with the Peoples acquisition, reduces our per-unit lease operating costs, increases our future production growth rate and increases the onshore US weighting of our inventory of future capital projects.