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Petroleum industry

Enron Corp. Completes $1.9 Billion Stock-for-Assets Swap with EOG

Strategic Insights

— 1 min read

Enron Corp. has successfully negotiated a $1.9 billion stock-for-assets swap with its 53%-owned affiliate, Enron Oil & Gas Co. (EOG), allowing it to dispose of most of its ownership interest in EOG. The agreement, which involves exchanging 62.27 million EOG shares for EOG's China and India operations, marks the culmination of Enron's efforts to monetize its interests in the company over the past decade. This strategic move is part of Enron's goal to focus on its international activities, particularly in countries where ownership of oil and gas supplies is critical to its business.

Key Takeaways:

  • The total value of the stock-for-assets swap is approximately $1.9 billion, making it a significant transaction for Enron Corp.
  • Enron will exchange 62.27 million of its 82.37 million EOG shares for EOG's China and India operations.
  • EOG will contribute $600 million in cash to one of the Indian units going to Enron, which will be used to finance international activities.
  • This is the fourth major transaction by Enron to dispose of its ownership interest in EOG since the 1980s, starting with an initial public offering.
  • The agreement follows a failed attempt by Enron to sell its EOG stake to Occidental Petroleum Corp. earlier this year.
  • Forrest E. Hoglund, EOG's chairman and CEO, noted that the transaction will provide improved access to debt and equity capital to support EOG's growth.
  • All Enron officers and directors serving on the EOG board will resign their EOG positions as part of the agreement.

Statistics:

  • $1.9 billion: Total value of the stock-for-assets swap between Enron Corp. and Enron Oil & Gas Co (EOG)
  • 62.27 million: Number of EOG shares exchanged by Enron
  • 82.37 million: Total number of EOG shares held by Enron
  • $600 million: Cash contribution by EOG to one of the Indian units going to Enron
  • 20%: Initial stake sold by Enron in an initial public offering in the late 1980s
  • 53%: Current stake of Enron in EOG before the transaction

Sources:

  • "Enron to Sell Major Energy Stake" by the New York Times

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