ORYX ACQUISITION TO BOOST CONOCO, MITCHELL NGL CAPACITY
ORYX ACQUISITION TO BOOST CONOCO, MITCHELL NGL CAPACITY HOUSTON, June 11 /PRNewswire/ -- Mitchell Energy & Development Corp.
(AMEX: MND) and Conoco today announced the formation of a 50-50 joint venture to acquire Oryx Energy Company's (NYSE: ORX) interests in 14 natural gas processing plants located in Texas and Oklahoma.
The parties are negotiating a purchase and sale agreement, and terms will be released upon closing, which is expected in August. Funding for the acquisition will be provided primarily through project financing to be obtained by the partnership. The joint venture will be formed by Conoco and Mitchell's Liquid Energy Corporation subsidiary. The acquired interests will boost each company's NGL (natural gas liquids) production by about 10,000 barrels per day. This would increase Mitchell's production to between 55,000 and 60,000 barrels per day and place the company among the nation's top 10 NGL producers. Conoco, already in the top 10, expects its production to approach 70,000 barrels per day following the acquisition. Most of the processing agreements for the plants to be acquired are "percent-of-proceeds" contracts, under which gas producers share with processors the risk associated with NGL and natural gas price fluctuations. "This represents another important 'hedge' for our liquids operations," explained Allen J. Tarbutton Jr., Mitchell's transmission and processing division president. "About two-thirds of our company's existing agreements are 'keep-whole' contracts, under which we earn a higher percentage of the proceeds, but must make up for gas consumed as fuel and shrinkage in processing operations." Tarbutton noted that the acquisition will place Mitchell's NGL production "on a par with such majors as Exxon, Shell, Mobil Oil and, of course, Conoco." Conoco will operate three of the 12 plants located in Oklahoma; Mitchell will operate one of the two plants in Texas. The remaining facilities will continue to be operated by other companies currently operating those plants. Conoco's David W. Branch, vice president and general manager for natural gas and gas products, said the acquisition would bring to 21 the number of processing plants operated by the company in the United States. Conoco has interests in another 28 U.S. plants. "The Texas plants are located east of one of Conoco's core gas processing areas -- our successful San Angelo gas gathering and processing system, which we acquired in 1989. The Oklahoma plants are adjacent to our facilities in the central part of that state and complement our overall business direction," Branch said. In the NGL business outside the United States, Conoco managed construction of, holds an interest in and operates the first cryogenic gas processing plant in the Caribbean, a state-of-the-art facility that came on stream in Trinidad and Tobago in 1991. Mitchell Energy & Development Corp. is one of the nation's largest independent energy producers. The company also has sizable real estate interests in the Houston-Galveston area. Conoco, with petroleum activity in 30 countries, is a subsidiary of Du Pont. -0- 6/11/92 /CONTACT: Debbie Siegfried of Mitchell Energy & Development Corp., 713-377-5658, or John T. Gehbauer of Conoco Inc., 713-293-3115/ (MND ORX) CO: Mitchell Energy & Development Corp.; Conoco; Oryx Energy Co. ST: TExas IN: OIL SU: TNM
LR -- NY086 -- 9471 06/11/92 18:00 EDT
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|Date:||Jun 11, 1992|
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