Energen to Sell Gas Utility to Laclede for $1.28 Billion

Apr 07, 2014 4:42 pm ET

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April 7 (Bloomberg) -- Energen Corp. agreed to sell its Alabama natural gas utility to the Laclede Group for $1.28 billion in cash, becoming the latest energy company to shed assets to raise money for exploration and production.

The sale of Alabama Gas Corp. is valued at $1.6 billion in total, including about $320 million of debt, according to a statement today from Birmingham, Alabama-based Energen. Energen’s after-tax proceeds are estimated to be $1.1 billion after drilling costs.

Energen will use cash from the deal to reduce short-term debt, allowing it to accelerate drilling in West Texas’ Permian basin. The purchase gives St. Louis-based Laclede, a utility owner that serves 1.13 million customers in Missouri, the largest gas distributor in Alabama.

The deal “allows Energen to clarify its corporate structure by becoming a pure exploration and production company, a trend being rewarded by the financial markets,” James McManus, Energen’s chairman and chief executive officer, said in the statement.

The unit, known as Alagasco, serves 422,000 homes and businesses, according to Energen’s website.

Laclede, in a separate statement, said the effective purchase price is $1.34 billion, after taking into account the present value, amounting to approximately $260 million, of tax benefits from the transaction.

Energen fell 1.4 percent to $80.37 at the close in New York. Laclede dropped 2.4 percent to $45.11, the biggest decline since June 20.

JPMorgan Chase & Co. is acting as financial adviser to Energen and Bradley Arant Boult Cummings LLP as legal counsel. Moelis & Co. LLC acted as financial adviser to Laclede. Akin Gump Strauss Hauer & Feld LLP was legal counsel.

The deal is expected to close this year.

--With assistance from Matthew Monks in New York.