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Sempra Energy, AGL Said to Be Interested in Energen Unit

Sempra Headquarters in San Diego
Sempra is interested in Alagasco because it owns a gas utility that operates in southwestern Alabama and would like expand its reach across the state, one of the people said. Photographer: Sam Hodgson/Bloomberg

March 13 (Bloomberg) -- Sempra Energy and AGL Resources Inc. have expressed interest in buying Energen Corp.’s natural gas utility, which could fetch more than $1 billion, people with knowledge of the matter said. Energen’s shares rose.

Energen is working with JPMorgan Chase & Co. to solicit bids for Alabama Gas Corp., which does business as Alagasco, said the people, who asked not to be identified because the process is private. Alagasco is Alabama’s largest gas distributor, servicing 425,000 homes and businesses, according to Energen’s website.

With the sale, Energen would join energy companies that are shedding assets to raise funds for exploration and production. While Energan began as a utility, Alagasco currently generates a small portion of its earnings before interest and taxes, and the company could instead use the cash in its Permian and Niobrara shale formations, said Irene Haas, an analyst with Wunderlich Securities.

While Alagasco no longer fits Energen’s interests, it’s a good business that will likely be sold to another utility, she said. Alagasco’s profits rose 16 percent in 2013 to $57.4 million, according Energen’s annual report.

Expanded Reach

Sempra, of San Diego, California, is interested in Alagasco because it owns a gas utility that operates in southwestern Alabama and would like expand its reach across the state, one of the people said. AGL, of Atlanta, wants to make more acquisitions now that it has finished integrating Nicor Inc., the gas utility it bought in 2011, Hank Linginfelter, AGL’s executive vice president of operations, said in a presentation to analysts on March 7.

Tasha Pelio, a spokeswoman for JPMorgan, declined to comment, as did Sherri Goodman of Energen, Annette Martinez of AGL and Jill Howard of Sempra.

Dow Jones reported in January that Energen is trying to sell Alagasco and values the unit at more than $1 billion.

Energen climbed almost 1 percent to close at $78.13 in New York, giving it a market value of about $5.7 billion. Sempra rose 1 percent to $95.54, while AGL increased 1 percent to $48.36.

To contact the reporter on this story: Matthew Monks in New York at mmonks1@bloomberg.net

To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net Elizabeth Wollman, Tina Davis

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