ENRON GAS SERVICES AND ZILKHA ENERGY COMPANY SIGN $15.5 MILLION PRODUCTION PAYMENT AGREEMENT
ENRON GAS SERVICES AND ZILKHA ENERGY COMPANY SIGN
$15.5 MILLION PRODUCTION PAYMENT AGREEMENT
HOUSTON, Nov 19 /PRNewswire/ -- Enron Gas Services, a unit of Enron Corp. (NYSE: ENE), and Zilkha Energy Company announced today that Zilkha has sold production payments to Enron Gas Services for $15.5 million. Under the terms of the production payments, Zilkha has conveyed an interest in oil reserves and producing properties equivalent to approximately one million barrels of crude oil to Enron Gas Services effective Oct. 1, 1991. The reserves will be
produced from five fields located in northern Louisiana. Zilkha will be responsible for production-related costs associated with operating the properties.
In addition to the production payments, Enron Gas Services has signed a contract wherein it will purchase all of the remaining production from these fields during the term of the production payments. Enron Gas Services will market and arrange transportation through Enron Oil Trading & Transportation Company for the oil delivered under the production payments and the crude oil purchase contract.
This is the second transaction Enron Gas Services has completed with Zilkha during 1991. Earlier in the year Zilkha sold approximately 17 billion cubic feet of natural gas to Enron for $24 million under a similar arrangement.
"We are pleased with our relationship with Zilkha," said Jeffrey K. Skilling, chairman and chief executive officer of Enron Gas Services. "This is another example of our continuing efforts to assist producers in bringing reserves to the marketplace. Enron has designed specific price commitments based on the Btu parity between gas and oil to fit our customers' gas buying needs. The transaction with Zilkha provides the oil base for these price commitments. Enron's funding source for these types of transactions is off-balance sheet and non recourse to Enron," Skilling added.
Enron Corp., America's leading natural gas company with approximately $13 billion in annual revenues and $10 billion in assets, operates the nation's largest natural gas transmission system; markets natural gas, gas liquids, crude oil and refined products nationally and worldwide; owns 84 percent of Enron Oil & Gas Company, one of the country's largest independent (non-integrated) natural gas exploration and production companies; is one of the largest independent developers and producers of electricity in the United States and the United Kingdom, with extensive experience in combined heat and power installations; and is a leading non-regulated purchaser and marketer of long-term natural gas commitments.
Zilkha Energy Company is a privately owned oil and gas exploration, development and production company headquartered in Houston. Zilkha operates primarily in Louisiana and Texas Federal waters where they hold an interest in over fifty blocks.
/CONTACT: Diane Bazelides of Enron, 713-853-6285/
(ENE) CO: Enron Gas Services; Zilkha Energy Company ST: Texas IN: OIL SU: TNM JT -- NY078 -- 5084 11/19/91 16:03 EST