Mesa Pulls Hugoton Holdings Off Market
DALLAS (AP) _ Mesa Limited Partnership on Friday pulled its Hugoton Royalty Trust holdings off the market, saying prices were too low to sell the prime properties in the nation’s largest natural gas field.
Mesa, T. Boone Pickens Jr.’s energy company, said in December it would package its Hugoton holdings into a separate trust and sell shares to raise money to help pay down some of the partnership’s $1.5 billion in long-term debt, much of it left over from the $715 million purchase of natural gas properties from Tenneco Inc. in 1988.
″At the right price, the Hugoton offering made sense for Mesa unitholders,″ Pickens said. ″We’re simply not going to sell a portion of our premier properties at an inferior price.″
The decision was based on ″unusual delays experienced in bringing the transaction to market and pricing indications which did not ... reflect the value of (Mesa’s) Hugoton reserves,″ the company said.
W. Mark Womble, Mesa’s vice president of finance, said the partnership had hoped to raise about $400 million through the sale, but indications were the offering would only bring in about $320 million.
Plans were to sell about 16 million units at about $25 per unit; Womble said indications were the units would bring no more than $20 each.
″It’s just not something we had to do,″ Womble said. ″We’re not to the point that we have to sell anything to pay debt.″
Mesa had about $350 million in cash investments at the end of 1989, Womble said, adding that the properties may never be sold.
″We have not said that we would ever come back to the market with this particular deal,″ he said.
″The field has been producing a long time, and will produce a long time into the future and it’s not going anywhere,″ he said by telephone from Mesa’s offices in Amarillo.
Between 12 percent and 15 percent of Mesa’s natural gas holdings are in the Hugoton field in Kansas, Womble said.