El Paso closes sale of Canadian assets, receives waivers on credit line

Petroleum News

El Paso Corp. said March 24 it has closed the sale of El Paso Oil & Gas Canada to BG Group for approximately $352 million in cash and has received “all subsequent waivers” on other financings which were a condition of receiving waivers in mid-March from lenders on the company’s financial facilities.

The sale supports El Paso’s recently announced long-range plan to reduce the company’s debt, net of cash, to approximately $15 billion by year-end 2005. To date, the Houston-based energy company has announced or closed approximately $2.9 billion of the $3.3 to $3.9 billion of assets sales targeted under the plan.

On March 16, lenders granted El Paso waivers on its $3 billion revolving credit facility that are related to the delay in filing its 10-K filings. Those waivers also applied to the effects of a potential restatement of previously reported financial results related to reserve revisions.

On Feb. 17, El Paso said it was slashing proven natural gas reserves by 1.8 trillion cubic feet, which represents 35 percent of its total reserves. This action was accompanied by a $1 billion write-down.

Since that announcement, El Paso has been reviewing whether portions of the revision should be applied to previous years, which would necessitate re-filing financial statements and related reserve disclosures from prior years.