Coastal Corp. reached an agreement with Valero Transmission Co., ending a lawsuit filed by Coastal over a 1979 gas search agreement.
The lawsuit to be withdrawn by Coastal was filed a year ago in state district court in Hidalgo County, Texas.In it, Coastal charged Valero, a unit of Valero Energy Corp., with breach of gas purchase contracts and sought damages of $243 million plus a ruling by the court that the 1979 gas search agreement had terminated because of the breach.
Under the settlement, Houston-based Coastal will dismiss its lawsuit and offer to sell to eligible Valero customers up to 40 million cubic feet of gas a day, most of which has been shut-in for about two years.
The gas will be sold at discounted prices for a period of six years.
Unlike the fixed prices established in the 1979 agreement, pricing for this gas will be sold at a discount from current market values which will be adjusted monthly throughout the term of the sale.