Shell In Plan To Buy Tejas Gas

Shell Oil Co plans to acquire natural gas pipeline company Tejas Gas Corp. for $61.50 a share or $1.45 million cash and the assumption of $900 million in debt and preferred stock, the companies said on Tuesday. The deal, announced after the stock market closed, will effectively give Shell full ownership of Coral Energy LP, a partnership with Tejas set up to market Shell's domestic natural gas production, a Tejas spokesman said. "The main driver on this deal was the best value for the stockholders," Tejas spokeswoman Debbie Dawson said. "There's a lot of operational things we have not discussed yet and probably will in the near future." The company planned to hold a conference call with analysts early on Wednesday to discuss the deal.

In the deal, Shell's natural gas midstream business will be combined with Tejas, which operates natural gas pipelines, processing and storage facilities in Texas, Oklahoma and Louisiana.

Shell's natural gas midstream operation includes offshore and onshore pipelines, gas processing and natural gas liquids fractionation, transportation and marketing in Texas, Louisiana, Mississippi and the Gulf of Mexico.

The Tejas board and insiders holding about 19 percent of the company's stock have agreed to back the deal, which must be approved by Tejas shareholders.

Tejas Chief Executive Officer Jay Precourt and Chairman Frederic Hamilton will be joined on the board of the new company by Shell President Philip Carroll and Shell Exploration and Production Co. President Jack Little.