U.S. energy holding company Energen Corporation (EGN) has divested 100% stake of Alabama Gas Corporation to The Laclede Group, Inc. (LG). The transaction is effective from Aug 31, 2014.
The sales price consists of the assumption of $250 million of Alagasco long-term debt and cash consideration of approximately $1.35 billion, subject to typical adjustments for working capital and short-term borrowing at closing. This divestment would allow Energen to become a pure exploration and production (E&P) company.
Energen plans to use cash proceeds from the transaction to reduce short-term debt and thereby enhance its financial capacity to accelerate the pace of drilling and development of its Permian Basin assets in 2015 and beyond.
Birmingham, AL-based Energen is an independent oil and gas exploration and production company engaged in the acquisition, exploration, and development of oil and gas in the U.S. The company also purchases, distributes and sells clean-burning, energy-efficient natural gas to commercial and residential customers. The company had approximately 3.3 billion barrels of oil-equivalent proved, probable and possible reserves and contingent resources at year-end 2013. These all-domestic reserves are located primarily in the Permian Basin of west Texas.
We believe that Energen will be able to generate sufficient cash flows for its shareholders in the coming years backed by strong operating performance and good management decisions. Higher production of natural gas and natural gas liquids had benefited the company's 2013 earnings.
Energen currently carries a Zacks Rank #3 (Hold). Meanwhile, investors can consider top-ranked stocks in the oil and gas sector such as WPX Energy, Inc. (WPX) and Sunoco Logistics Partners L.P (SXL), both sporting a Zacks Rank #1 (Strong Buy).