* Laclede to assume about $320 mln of Alagasco's debt
* Deal will also let Energen fund Permian basin drilling
* Deal to help Laclede move beyond Missouri into Alabama
* Energen shares up as much as 4 pct, Laclede falls as much
as 3 pct
(Adds conference call details, analyst comment, share movement)
April 7 Energen Corp will sell its
150-year old natural gas utility Alabama Gas Corp (Alagasco) to
Laclede Group Inc for $1.28 billion in cash, helping it
repay debt and fund drilling for oil and gas in the Permian
The purchase of the largest natural gas utility in Alabama
will help Laclede move beyond its home state of Missouri into
the Southeast and increase its customer count to 1.55 million
from 1.13 million.
Shares of Laclede, which will assume about $320 million of
Alagasco's debt, fell as much as 3 percent. Shares of Energen,
which will become a pure exploration and production company
after the sale, rose as much as 4 percent.
"This (deal) ... will enhance our financial capacity such
that we will be positioned to outspend cash flow for the next
several years," Energen Chief Executive Officer James McManus
said on a conference call on Monday.
Energen has debt of $1.11 billion and reported negative
working capital of $682.7 million as of Dec. 31.
Energen said it expects after-tax proceeds of $1.1 billion
from the sale and McManus said the company could boost its
spending by $200-$250 million, helping it step up production in
its oilfields in the Permian basin in Texas and New Mexico.
"Strong pricing, in terms of gross and net proceeds, will
provide Energen liquidity to accelerate its Permian Basin rig
count, possibly even by late 2014," Sterne Agee analysts led by
Tim Rezvan wrote in a note to clients.
Energen said it would pay a lower dividend, while Laclede
said the purchase supported additional dividend growth.
Laclede said it expects the purchase to strongly add to net
economic earnings per share in the first full year.
Laclede said it had a fully committed $1.35 billion bridge
facility with Credit Suisse and Wells Fargo Bank, N.A. To fund
The companies said they expect the deal to close this year.
J.P. Morgan Chase & Co advised Energen while Bradley Arant
Boult Cummings LLP acted as legal counsel.
Moelis & Co LLC advised Laclede and Akin Gump Strauss Hauer
& Feld LLP was its legal counsel.
Energen's shares were down under 1 percent at $80.86, while
Laclede was down 2 percent at $45.29 in afternoon trading on the
New York Stock Exchange on Monday.
(Reporting By Sneha Banerjee and Swetha Gopinath in Bangalore;
Editing by Don Sebastian and Savio D'Souza)