Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced that it has entered into a definitive agreement to sell all of its properties located in South Texas, excluding its Eagle Ford Shale oil properties, for after-tax cash proceeds of $325 million. The transaction is expected to close on or before February 15, 2013, with an effective date of January 1, 2013, and is subject to customary closing conditions and post-closing purchase price adjustments. The properties produced 66 MMcfe/d (86% natural gas) during the third quarter of 2012, had estimated proved reserves of 272 Bcfe (85% natural gas) as of December 31, 2011, and generated approximately $60 million of lease-level income during 2012. Forest intends to use the proceeds from this divestiture to pay down debt and retains all of its natural gas hedges.
Patrick R. McDonald, President and CEO, stated, “We are pleased to announce further progress in our deleveraging plan with the sale of our non-core South Texas natural gas properties at metrics that are attractive to Forest shareholders from an equity and debt perspective. We have now made significant progress in executing our stated goal of improving and restoring flexibility to our balance sheet. The allocation of capital and resources towards our core oil and liquids assets in the Texas Panhandle and Eagle Ford, alongside the evident improvement in our financial position, is a material positive for us. In addition to the deleveraging aspect of this transaction, on a pro forma basis, the liquids contribution of our production mix is approximately forty percent and will continue to increase due to our oil-focused drilling program. Furthermore, Forest continues to maintain its strategic natural gas optionality within our significant East Texas / North Louisiana acreage position.”
Source: Business Wire
To access over 3,000 of the latest oil projects from across the world visit Projects OGP for free trial today