Dominion Resourcessaid on Monday that it would sell most of its gas and oil exploration and production operations to two different companies for about $6.5 billion as part of its plan to focus on its power business.
Loews , a conglomerate, will pay about $4.03 billion for Dominion's gas assets in the Permian Basin in Texas as well as properties in Michigan and Alabama, while XTO Energy , a natural gas producer, will pay about $2.5 billion for the operations in the Rocky Mountains, Gulf Coast, San Juan Basin and Louisiana.
The sale of these properties, which include 3.51 trillion cubic feet equivalent of proved natural gas and oil reserve as of Dec. 31, is expected to close in August.
The remaining properties earmarked last year for sale, largely in Oklahoma, will be marketed in a new process that will begin in July, Dominion said.
These sales are part of a broader divestiture plan that included its Gulf of Mexico properties, which it agreed in April to sell to ENI Plc for $4.76 billion, and its Canadian property, which it announced last week that it would sell for $583 million to a Canadian energy trust.
Combined, Dominion has raised $11.84 billion so far. The Richmond, Virginia-based company said it had earmarked the asset sale proceeds for about $3.2 billion to $3.5 billion in debt reduction, with the remainder planned for the repurchase of common stock.
Dominion forecast 2008 operating earnings of $6 or more per share and future growth of 4 percent to 6 percent per share as it operates as a more pure-play power company.
As previously announced, Dominion, which has been shedding its gas assets, intends to maintain its gas operations in the Appalachian. The company has 26,500 megawatts of power generation and operates a utility in Virginia.
Based on the acquisition, XTO raised its forecast for production growth in 2007 to 15 percent from 10 percent. It also set its initial production growth target for 2008 at 15 percent.