Copano Energy, L.L.C., a Texas natural gas company, announced its private placement of $50 million of common units at a price of $35.25 per unit with three institutional investors. Proceeds will be used to reduce outstanding indebtedness, including indebtedness recently incurred in connection with the expansion of Copano’s commodity hedging program.
Copano acquired in December a portfolio of natural gas and product-specific natural gas liquids puts and entered into swap agreements with respect to four natural gas liquid products.
The expanded program, in combination with Copano’s West Texas Intermediate (WTI) crude oil puts acquired in July 2005, was implemented as a cash flow hedge to protect the company from a substantial decline in commodity prices.
The company purchased puts on natural gas through 2009 and purchased puts and entered into swaps for ethane, propane, iso-butane and normal butane through 2008. The company paid approximately $38 million for the newly-acquired puts and used cash on hand and borrowings under its revolving credit facility to pay for them.