Exco, BG to jointly develop U.S. midstream fields

(Reuters) - U.S. oil and gas explorer Exco Resources Inc (XCO.N) said it reached an agreement with Britain's BG Group (BG.L) to jointly develop and operate the Dallas-based company's midstream assets in East Texas and North Louisiana.

In a statement on Wednesday, Exco said BG Group would pay $249 million in cash for a 50 percent interest in a newly formed company that would hold the midstream assets.

The deal, which does not cover the Vernon Field midstream assets, is expected to close in August 2009 and have an effective date of January 1, 2009, Exco said.

In June, BG said it would pay Exco $1.3 billion for an interest in shale gas resources in the Haynesville shale gas area.

Exco, which was forced to slash its 2009 investment budget by 40 percent due to lower gas prices, said this week it would continue with plans to sell certain non-strategic assets during the year.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Anshuman Daga)