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 PORT HURON, Mich., Jan. 11 /PRNewswire/ -- Southeastern Michigan Gas Enterprises, Inc. (NASDAQ-NMS: SMGS) (the "Company") announced today that it has filed Form 8-K with the Securities and Exchange Commission to report on litigation affecting the Company.
 Vesta Energy Corporation ("Vesta") has filed a complaint in the Federal District Court for the Northern District of Oklahoma against seven defendants, including Southwestern Energy Company ("Southwestern") and the NOARK Pipeline System ("NOARK"), an Arkansas Limited Partnership. Southeastern Michigan Gas Enterprises, Inc.'s ("Enterprises") subsidiary, SEMCO Arkansas Pipeline Company, holds a 31.67% general partnership interest in NOARK and has guaranteed 40% of NOARK's debt service on its approximately $88 million of debt. Southwestern holds a 47.33% general partnership interest in NOARK and has guaranteed 60% of NOARK's debt service. Neither Enterprises nor any of its subsidiaries is a party to the suit.
 Vesta seeks actual damages on several theories in an aggregate amount exceeding $1 million, seeks punitive damages in excess of $1 million and seeks to rescind its contracts with certain of the defendants, including its contract to transport gas on the NOARK system ("the NOARK Contract"). Under the terms of the NOARK Contract, Vesta is obligated to transport up to 50,000 Mcf of firm gas per day on the NOARK system at the full firm rate. This obligation requires Vesta to pay NOARK a demand fee equal to approximately 19.3 cents per Mcf on the 50,000 Mcf/day and approximately 9.2 cents per Mcf for volumes actually transported on the NOARK system.
 On Jan. 1, 1994, Vesta discontinued shipments of firm gas pursuant to the NOARK Contract and ceased payment of the demand fee. Vesta had been shipping approximately 32,000 Mcf per day, generating revenues of approximately $380,000 per moth to NOARK. Prior to Vesta's ceasing to ship firm gas on the NOARK system, NOARK was transporting approximately 90,000 Mcf per day at firm and interruptible rates. NOARK has an operating capacity of 141,000 Mcf per day. Southwestern, which was providing approximately 25,000 Mcf per day of the gas transported by Vesta over the NOARK system, has indicated its current intent to continue to ship those volumes over the NOARK system, initially at the full firm rate, generating NOARK revenues of approximately $210,000 per month. As these circumstances continue, the loss of revenues to NOARK of approximately $170,000 per month reduces Enterprises' net income by approximately $35,000 per month.
 It is impossible to predict the outcome of this litigation. Southwestern has indicated, after initial review of the complaint and relevant facts, that it believes there is no merit to the lawsuit and that it intends to counterclaim asking for specific performance of the NOARK Contract to transport gas and/or damages.
 The Company distributes and transports natural gas to approximately 210,000 customers in 23 counties in Michigan through its subsidiaries Southeastern Michigan Gas Company, Battle Creek Gas Company and Michigan Gas Company. The Company also has operations and investments in natural gas marketing, gas transmission and gathering and underground storage of natural gas.
 -0- 1/11/94
 /CONTACT: Marcia M. Chmielewski, treasurer of Southeastern Michigan Gas Enterprises, 810-987-2200/

CO: Southeastern Michigan Gas Enterprises, Inc.;
 Vesta Energy Corporation ST: Michigan, Oklahoma IN: UTL OIL SU:

TO -- DE007 -- 0867 01/11/94 09:17 EST
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Publication:PR Newswire
Date:Jan 11, 1994

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