"We are constantly evaluating our assets, in order to high-grade our operations and strengthen our balance sheet," said Pogo's Chairman and Chief Executive Officer, Paul G. Van Wagenen. "Consistent with our previously stated goal of reducing risk and enhancing investment value to our shareholders, we have initiated a review of all of Pogo's assets to determine where to deploy our resources most effectively. As part of this review, the Company has analyzed the performance of its asset base relative to targeted rates of return, and is determined to enhance value for its shareholders by pursuing a sale of the non-core portion of those assets. We expect this sale to further concentrate Pogo's asset base into one that is more capable of steady, predictable growth, as well as reducing unit operating costs, improving capital efficiency and increasing Pogo's profitability."
Based on current market valuations for comparable properties, the Company would expect to ultimately realize in the range of $700 million to $800 million in proceeds from the sales of all non-core assets. Pogo expects to proceed expeditiously with a phased sale process and anticipates closing the sale of the Gulf of Mexico, south Texas, east Texas and south Louisiana properties by the end of the first quarter of 2007. The second phase of this sale process, covering certain properties in the Permian Basin, the Texas panhandle and in western Canada should commence early in 2007 and be completed by mid-year. Proceeds from the asset sales are planned to be used for debt reduction. Pogo has retained Jefferies Randall & Dewey, a division of Jefferies & Company, Inc., to assist in the initial sale process.
The properties included in the first phase of the divestment plan currently would be expected to produce, in 2007, oil and natural gas equal to approximately 37 million cubic feet equivalent per day and represent more than 90 billion cubic feet equivalent of proven reserves, plus meaningful probable and possible reserves, as well as exploratory upside potential, and would include approximately 125,000 gross leasehold acres.
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