PNM Resources won't buy Cap Rock Energy

Instead, the companies said they will focus their efforts on completing Continental's pending acquisition of the natural gas business of PNM Resources' subsidiary, PNM.

In January, PNM Resources agreed to sell its New Mexico utility's natural gas operations to a Continental Energy Systems unit for $620 million. In a related deal, PNM was to buy Cap Rock Energy, Continental's Texas electric delivery division, for $202.5 million.

"The sale of the PNM gas operations remains on track, and we can now focus our complete attention on obtaining the New Mexico regulatory approval for that transaction," said Jeff Sterba, PNM Resources chairman, president and chief executive, in a statement.

The companies did not disclose a reason for the termination; however, as part of the termination, Continental agreed as part of the negotiations to pay PNM Resources $15 million, upon the closing of the PNM gas sale.

PNM's shares rose 51 cents, or 4.4 percent, to close at $12.22.