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EASTEX ANNOUNCES AGREEMENT IN PRINCIPLE TO ACQUIRE SERVCO

 EASTEX ANNOUNCES AGREEMENT IN PRINCIPLE TO ACQUIRE SERVCO
 HOUSTON, Nov. 26 /PRNewswire/ -- Eastex Energy Inc. (NASDAQ/NMS: ETEX) ("Eastex") announced today that it has entered into an agreement in principle to acquire Service Pipeline Company and its subsidiaries ("Servco") in a business combination expected to be accomplished as a merger between Servco and a newly formed subsidiary of Eastex in a transaction anticipated to close prior to year end.
 Servco is a privately held company headquartered in Houston, which owns and operates 11 active gas gathering systems in Oklahoma, New Mexico and Texas. Eastex will acquire Servco and its assets in exchange for the issuance of a number of shares of Eastex common stock to be determined based upon a formula relating to the net asset value of Servco at the closing date -- presently anticipated to be approximately 450,000 shares -- and the assumption by Eastex of approximately $2.9 million in outstanding Servco secured indebtedness.
 As of Sept. 30, 1991, Servco had total assets of $5.5 million, long-term debt of approximately $2.5 million, and total stockholders' equity of approximately $1.4 million. Also for the nine month period ended Sept. 30, 1991, Servco reported a net loss of $332,000 on total revenues of approximately $5.7 million. During the period, Servco reported gross profit from operations of $957,000.
 The transaction is subject to completion of satisfactory due diligence by Eastex and Servco, negotiation and execution of definitive acquisition agreements, approval of Servco shareholders and the satisfactory renegotiation of the outstanding secured debt of Servco.
 Commenting on the transaction, Eastex President Robert G. Phillips stated that the proposed transaction was a part of a planned asset acquisition strategy which had been adopted by Eastex to exploit certain opportunities the company perceives will occur within the industry over the next two years. Eastex intends to expand its existing gathering business through the acquisition of strategically located pipeline systems which can benefit from improved operational and financial management and better marketing of system volumes by Eastex's nationwide gas marketing program. "We believe the Servco acquisition and this strategic expansion will provide Eastex with an increased base of operations and improved cash flows, a more balanced portfolio of business segments, increased control of long-term gas supplies and capital development opportunities when renewed drilling activity emerges."
 Eastex Energy Inc. through its various subsidiaries is involved in the marketing, storage, gathering and transportation of natural gas.
 -0- 11/26/91
 /CONTACT: Robert G. Phillips, president and chief executive officer of Eastex Energy, 713-650-6255/
 (ETEX) CO: Eastex Energy Inc.; Service Pipeline Company ST: Texas IN: OIL SU: TNM


JT -- NY047 -- 7281 11/26/91 12:17 EST
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Publication:PR Newswire
Date:Nov 26, 1991
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