Dominion sells most oil and gas units

Gas and electric company Dominion Resources Inc. said Monday it will sell most of its U.S. onshore oil and gas exploration and production operations through two transactions for a combined $6.5 billion.

Loews Corp., which charters offshore drilling rigs to oil and gas explorers, will buy Dominion's operations in Michigan, Alabama and the Permian Basin of Texas for $4.03 billion.

"We are very positive on the long-term prospects for natural gas in the USA," Loews CEO James Tisch said in a conference call. "I wouldn't be surprised if the gas we produced 20 years from now generates more income for us on a present value basis than the gas that we'll produce next year."

New York-based Loews also owns CNA Financial Corp., the tobacco company Lorillard Inc., Loews Hotels and the watchmaker Bulova Corp. It is led by the Tisch family and once owned the CBS television network.

XTO Energy Inc. of Fort Worth, Texas, will acquire Dominion's operations in the Rocky Mountains, the Gulf Coast, New Mexico's San Juan Basin and South Louisiana for $2.5 billion.

As of Dec. 31, the two operations comprised a total of about 3.51 trillion cubic feet equivalent of proved natural gas and oil reserves. Both deals are expected to close in August.

Dominion has said that it wants to refocus on its power generation and energy distribution, transmission, storage and retail businesses. The process to divest its Mid-Continent Basin operation will begin in July, but the company reiterated plans to retain its Appalachian operations.

Dominion added that as a result of the divestitures, it expects to generate operating earnings in 2008 of $6 per share or more.

"We are confident that we can achieve long-term average annual earnings per share growth of at least 4 percent to 6 percent thereafter," said Thomas F. Farrell II, Dominion's chairman, president and chief executive officer. He said the company would provide detailed 2008 earnings guidance in January.

Tisch said Loews Corp. has not decided whether to take the assets public under a limited partnership.

"At some later point in time we'll consider if we want to take this public and under what circumstances," he said.

Dominion Resources shares rose 23 cents to $87.87 Monday, Loews shares gained $1.33 to $52.35, and XTO Energy jumped $3.24 to $61.61.

Source : news.yahoo.com