Contango Oil & Gas Co. on Tuesday said that it has entered into a definitive agreement with a major Asian utility company (the "Purchaser") to sell its 10% limited partnership interest in Freeport LNG Development LP ("Freeport") for approximately $68 million. The sale is subject to the Purchaser's board approval and customary closing conditions and adjustments.
Freeport is engaged in developing a liquefied natural gas receiving and gasification terminal on Quintana Island, near Freeport, Texas. Contango owns the ten percent limited partnership interest in Freeport through its wholly owned subsidiary, Contango Sundance, Inc. The sale is part of Contango's previously announced review of strategic alternatives to enhance shareholder value.
Merrill Lynch & Co. acted as financial advisor to Contango in connection with the sale.
Kenneth R. Peak, Contango's Chairman and Chief Executive Officer, said, "Contango will use the proceeds from this sale to prepay the outstanding $20 million term loan from the Royal Bank of Scotland, with the remaining funds available for working capital."
Contango is a Houston-based, independent natural gas and oil company. The Company's core business is to explore, develop, produce and acquire natural gas and oil properties primarily offshore in the Gulf of Mexico. The Company also holds investments in companies focused on commercializing environmentally preferred energy technologies.