Mitchell Energy and Development Corp. Divests Assets to Improve Profitability

Strategic Insights -

Mitchell Energy and Development Corp., a company with a significant presence in the Houston-Galveston area, has been taking steps to strengthen its financial situation by divesting its assets. The company has sold 16 of its oil rigs to Nabors Industries Inc. for $9 million, with 13 more rigs still on the market. Additionally, Mitchell has sold the Winnie Pipeline Co. to Centana Energy Corp., a subsidiary of Panhandle Eastern Corp., which also acquired the Spindletop Gas Storage Facility and the Liquid Energy Corp. natural gas processing plant.

Key Takeaways:

  • Mitchell Energy and Development Corp. has sold 16 oil rigs to Nabors Industries Inc. for $9 million, a deal that is expected to close in June.
  • The company has also sold the Winnie Pipeline Co. to Centana Energy Corp., a subsidiary of Panhandle Eastern Corp.
  • The Spindletop Gas Storage Facility, which was to have been expanded this year, has been sold to Panhandle for a "very attractive" price.
  • Mitchell plans to benefit from the sale by recouping its costs and earning additional income without any risk.
  • The sale is seen as a bid by Mitchell to reduce debt in response to low oil prices or to spin off its real estate holdings.

Statistics:

  • 16 oil rigs sold to Nabors Industries Inc. for $9 million
  • 13 more rigs on the market
  • The Winnie Pipeline Co. is a 400-mile intrastate pipeline
  • The Spindletop Gas Storage Facility has a capacity of about 4 billion cubic feet (Bcf)
  • Ultimate capacity for the facility could be as high as 36 Bcf
  • The Liquid Energy Corp. natural gas processing plant can handle 75 million cubic feet per day (MMcfd)
  • Jimmy Mitchell, the CEO of Mitchell Energy and Development Corp., said the sale will benefit the company by allowing it to recoup its costs and earn additional income without any risk.

Sources:

  • "Mitchell unit to sell pipeline, storage, processing facilities" by Stewart Gulliksen, Houston Chronicle, May [no date provided]
  • "Mitchell Energy to sell oil rigs, pipeline assets" by Gail Robinson, Oil and Gas Journal, May [no date provided]
  • "Mitchell Energy To Cut Budget By $60 Million" by Pierful [no publication date provided]
  • Interview with John Barnett, spokesman for Panhandle Eastern Corp.