HRG Group to sell Louisiana, Texas gas assets

Posted on October 9, 2015 | By Bloomberg

HRG Group Inc., which counts Leucadia National Corp. as its largest shareholder, agreed to sell gas fields in Louisiana and Texas as Chief Executive Officer Omar Asali reshapes the company.

HRG’s Compass Production Partners subsidiary will get $160 million in cash from Indigo Minerals for the Holly, Waskom and Danville properties, which include drilling rights across about 90,000 acres (36,000 hectares) and produce about 34 million cubic feet a day, Asali’s company said in a statement Friday.

Asali, former co-head of hedge fund strategies at Goldman Sachs Group Inc., has sought to refocus operations since becoming CEO this year at the company, which was previously led by hedge fund manager Philip Falcone as CEO. HRG’s Spectrum Brands Holdings Inc. unit reached a deal in April to purchase the parent of Armor All and STP engine oil. New York-based HRG also announced that month that it was weighing a sale of insurer Fidelity & Guaranty Life.

The Indigo deal “will be accretive in reducing Compass’ borrowing base and further enhance Compass’s ability to execute its future business plans,” Asali said in the statement.

The energy unit has been hurt by lower natural gas prices, posting an operating loss of more than $400 million in the first nine months of the fiscal year, and HRG said in an August filing that it could incur more impairments. Natural gas trades for about $2.50 per million British thermal units, less than a fifth of its 2008 peak.

Indigo owns stakes in more than 1,500 wells in 15 states, most of them along the U.S. Gulf Coast, according to the Houston-based company’s website. Formed in 2006, Indigo has been drilling for four years in the same area as the assets to be acquired from HRG.

HRG advanced 14 cents to $12.78 at 9:38 a.m. in New York trading, narrowing its decline for the year to about 9.8 percent. Asali’s company said the Indigo deal is expected to be completed in the current fiscal quarter.