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El Paso Corp. Acquires Smaller Denver-Based Energy Company

Posted on: Wednesday, 20 July 2005, 21:01 CDT

Jul. 20--Low-profile Medicine Bow Energy Corp. of Denver made its presence known in a big way Tuesday by agreeing to be acquired for $814 million by energy giant El Paso Corp.

Cowpoke-turned-entrepreneur Mitch Solich hit pay dirt once again, the second time in four years that he has sold an oil and gas company he started from scratch.

The El Paso deal, combined with the 2001 sale of Solich's Shenandoah Energy to Questar Corp., marks $1.2 billion in payoffs for the 55-year-old Pueblo native and his private investors.

Like many big energy producers, Houston-based El Paso has been looking for Rocky Mountain oil and gas to supplement declining production from its maturing fields in Texas, Louisiana and Oklahoma.

About two-thirds of Medicine Bow's oil and gas reserves are in the Rockies.

That caught the attention of El Paso, which made a preemptive bid for Medicine Bow, edging out several other potential suitors, said investment banker Jon Hughes of Denver-based Petrie Parkman & Co.

"There's a trend in the Rockies that is really picking up with the high energy prices we're seeing," said Hughes, who represented Medicine Bow in the transaction.

El Paso plans to keep Medicine Bow's 50-employee downtown Denver office largely intact.

"We're not doing this (acquisition) as a cost-cutting initiative," said Lisa Stewart, president of El Paso's production unit. "We will determine how we'll organize the Denver office, but I believe that most, if not all, of the employees will be offered jobs." One exception will be Solich, who plans to leave the company upon completion of the deal, which is expected to happen this fall.

As he did first with Shenandoah Energy and then with Medicine Bow Energy, Solich said he most likely will start a new oil and gas production venture with private equity investors.

Solich, a Vietnam War veteran and Colorado State University graduate, was a ranch hand in Wyoming and Colorado in the 1970s before migrating to jobs in banking and energy.

In the mid-1990s, he served as chairman of the Jefferson County Republican Party.

Medicine Bow Energy's major production areas in the Rocky Mountains include the Powder River and Green River basins in Wyoming and the San Juan Basin that straddles the Colorado-New Mexico border.

The firm also has oil and gas in Texas, Oklahoma and Mississippi.

El Paso, known primarily for its petroleum pipeline network, said it wants to increase oil and gas cash flow as it works to pay off $18 billion of debt and reverse four consecutive annual losses since 2001 that totaled more than $5 billion.

Shares of El Paso rose 29 cents Tuesday to $2.13. The stock has risen 51 percent in the past year.

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Source: The Denver Post

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