โ Scribed by Willett, Robert E.
No coin nor oath required. For personal study only.
exas Eastern Corporation (NYSE-TET), of Houston, is a $4-billion corporation (1986 revenues), which like many other major interstate pipelines, over the years had diversified into a number of areas. Today, like these other pipelines, it is strengthening some areas and disposing of others.
restructured. It operates in the following areas, some of which have changed dramatically:
Beginning in 1986, under the guidance of new president Dennis R. Hendrix, Texas Eastern has 0 Natural gas pipelines-Texas Eastern has 10,600 miles in natural gas transmission lines, the major asset of the company. These pipelines ship gas from the Gulf of Mexico to the Northeast. They account for 43 percent of the company's assets and for 65 percent of the company's operating income (figure 1). 0 Exploration and production-The company explores for and produces oil and gas in the North Sea and Pacific Basin. It does not operate domestically: in November 1986 it sold its U S .
properties for $176 million to Noble Affiliates (NYSE-NBL). Said Kidder Peabody analyst Ron Barone, "Dennis Hendrix, then chief operating officer, just did not like the returns the domestic portion was getting." In 1986 the oil-and-gas properties that remained accounted for 29 percent of the company's assets but only 10 percent of its operating income. But these properties are an important lever to the company: said Barone, "A dollar-a-barrel increase means 8 to 10 cents more a share." 0 Products pipelines-The company has 4,120 miles in products pipelines, which carry gasoline and LP-gas. These pipelines roughly parallel the natural gas system on their route northeast, with an additional jog northwest to the Chicago area. In 1986, the products pipeline accounted for 10 percent of the company's assets and 15 percent of its operating income. 0 LP-Gas-Untill987, the company had complete control of Petrolane, one of the largest marketers of LP-gas in the world. In 1986, the LP-gas network, which includes European as well as natural
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