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TRANSCO AND TORCHMARK TO COMBINE COAL SEAM GAS PROPERTIES

 TRANSCO AND TORCHMARK TO COMBINE COAL SEAM GAS PROPERTIES
 HOUSTON, Sept. 4 /PRNewswire/ -- Magnolia Methane Corporation and


Velasco Gas Company Ltd., affiliates of Transco Energy Company (NYSE: E) and Torchmark Corporation (NYSE: TMK), respectively, today announced they have signed an agreement relating to their coal seam gas properties in the Black Warrior Basin of Alabama. Under the agreement, Magnolia's 500 wells and Velasco's 378 wells, together with their related facilities and acreage positions in the Black Warrior Basin, will be operated and managed by a subsidiary of Torch Energy Advisors Incorporated, Torchmark's oil and gas asset management subsidiary.
 Magnolia will receive $10 million in cash at closing and will receive future payments based on the performance of the combined properties, which will be owned by Velasco. Torchmark will gain a significant increase in available Section 29 tax credits while diversifying its existing portfolio. The proposed transaction is subject to the arrangement of non-recourse project financing for the $10 million payment to Transco and the costs associated with completing the project, receipt of a favorable ruling from the Internal Revenue Service, final approval of each company's boards of directors, and certain other conditions.
 Transco Chairman, President and Chief Executive Officer John P. DesBarres said, "We are pleased to have reached this agreement with Torch, a proven operator in the Black Warrior Basin. We believe that the combined project would significantly diversify our development risks, eliminate our future capital requirements and maximize the value of the related tax credits." DesBarres noted, however, that the transaction has many significant conditions yet to be satisfied and that the ultimate financial results that Transco might realize from its coalbed methane assets depends upon several factors and cannot be predicted, in part, because Transco's sharing percentage will vary, depending upon the development of the Transco properties.
 Torch Chairman and Chief Executive Officer J. P. Bryan said, "We consider this a milestone event in the coal seam gas industry. The properties currently produce more than 25 million cubic feet of gas per day, and we expect significant increases during 1992 and 1993 as the wells de-water and the remaining wells are completed." Torch manages more than $1 billion in oil and gas investments for institutions and corporations.
 Transco Energy Company transports natural gas through its interstate pipeline systems to markets in the eastern and midwestern United States, arranges for the transportation and sale of natural gas throughout the United States, and is active in independent power generation and natural gas vehicle fueling services. Transco also maintains modest positions in other energy-related businesses.
 -0- 9/4/92
 /CONTACT: Katherine K. Putnam (media), 713-439-2455, or R. Dean Ayers (analysts), 713-439-2593, both of Transco/
 (E TMK) CO: Transco Energy Company; Torchmark Corporation ST: Texas, Alabama IN: OIL SU:


GK -- NY006 -- 6801 09/04/92 08:36 EDT
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Publication:PR Newswire
Date:Sep 4, 1992
Words:467
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