PSEG to Divest Energy Development Corporation

Strategic Insights -

Public Service Enterprise Group Incorporated (PSEG) announced that it will pursue the divestiture of its non-regulated oil and gas exploration and development business, Energy Development Corporation (EDC). EDC, based in Houston, has approximately 230 employees and operates in 13 states, offshore in the Gulf of Mexico, and internationally in the United Kingdom, Argentina, Senegal, Tunisia, and China. The company has about 4.9 million net acres under its operations and holds net reserves totaling around 900 billion cubic feet-equivalent of proved reserves, with about 67% being natural gas. PSEG's chairman and CEO, E. James Ferland, stated that the decision to divest EDC is aimed at unlocking its value for PSEG's shareholders, as the company no longer sees EDC as a strategic fit in its energy solutions efforts. Morgan Stanley & Co. Incorporated has been retained to study strategic alternatives for PSEG.

Key Takeaways:

  • PSEG will pursue the divestiture of Energy Development Corporation (EDC) to provide maximum benefit to its shareholders.
  • EDC has approximately 230 employees and operates in 13 states, offshore in the Gulf of Mexico, and internationally in the United Kingdom, Argentina, Senegal, Tunisia, and China.
  • The company holds net reserves totaling about 900 billion cubic feet-equivalent of proved reserves, with about 67% being natural gas.
  • PSEG believes that EDC no longer represents a strategic fit in its efforts to provide energy solutions to customers.
  • The divestiture of EDC is expected to occur during 1996.
  • EDC has about 4.9 million net acres under its operations.
  • PSEG has retained Morgan Stanley & Co. Incorporated to study strategic alternatives for the company.
  • EDC's exploration successes have enabled it to grow its proved reserve base and has operated at or near the top of its peer group in ensuring that the future value of added reserves significantly exceeds costs associated with exploration and development or acquisitions.

Statistics:

  • PSEG will divest EDC during 1996.
  • EDC has about 4.9 million net acres under its operations.
  • Net reserves total about 900 billion cubic feet-equivalent of proved reserves.
  • About 67% of the reserves are natural gas.
  • EDC operates in 13 states, offshore in the Gulf of Mexico, and internationally in the United Kingdom, Argentina, Senegal, Tunisia, and China.
  • The company has approximately 230 employees.

Sources:

  • "Public Service Enterprise Group Incorporated (PSEG) announces today that it will pursue the divestiture of Energy Development Corporation (EDC), its non-regulated oil and gas exploration and development business based in Houston." - PSEG press release
  • "Morgan Stanley & Co. Incorporated has been retained to study strategic alternatives available to PSEG." - E. James Ferland, PSEG's chairman of the board and chief executive officer
  • "We intend to pursue a transaction -- either in the public or the private market -- that will provide the maximum benefit to our shareholders." - E. James Ferland, PSEG's chairman of the board and chief executive officer
  • "Our decision is designed to unlock EDC's value for the benefit of our shareholders." - E. James Ferland, PSEG's chairman of the board and chief executive officer
  • "With the advent of the energy futures market, we can best serve our customers -- as well as our shareholders -- without owning large volumes of oil and gas." - E. James Ferland, PSEG's chairman of the board and chief executive officer
  • /CONTACT: Neil Brown, Corporate Communications of PSE&G, 201-430-6017/