Contango Oil & Gas Company announced that Freeport LNG Development, L.P. (FLNG), in which Contango holds a 10 percent partnership interest, has closed a $383 million private placement note issuance. The funds from the notes will be used to fund the construction of Phase I of FLNG's liquefied natural gas regasification terminal located near Freeport, Texas. Phase I will have a send-out capacity of 1.75 billion cubic feet per day. Natural gas will be transported through a 9-mile pipeline to Stratton Ridge, Texas, a major point of interconnection with the Texas intrastate gas pipeline system. The terminal's Phase I capacity has been sold to ConocoPhillips (COP)
and The Dow Chemical Company (DOW)
. Construction is expected to be completed by January 2008.
The proceeds of the notes will also fund the development of a gas storage salt cavern located at Stratton Ridge and a portion of the cost of an expansion of the LNG terminal. Phase II expansion of the LNG terminal includes a second LNG unloading dock and 0.5 Bcf per day of additional send-out capacity. Phase II capacity has been sold to MC Global Gas Corporation. Expansion applications have been submitted to the FERC and other government agencies and assuming approval of these applications in mid-2006, Phase II capacity is expected to be available in 2009.