Houston Exploration's onshore North American asset base consists of assets in South and East Texas, the Arkoma Basin, Eastern Colorado Niobrara and the Uinta Basin and will add a significant inventory of low-risk repeatable play drilling opportunities to Forest's portfolio.
Forest paid approximately $750 million in cash and issued approximately 24 million shares for the acquisition. Forest funded the cash portion of the acquisition with the net proceeds from its private placement of $750 million of 7.25% Senior Notes due 2019 and borrowings under its amended and restated credit facilities.
Upon close of the pending sale of Forest's Alaska Business Unit, Forest intends to issue updated guidance.
H. Craig Clark, President and CEO, stated, "The acquisition of Houston Exploration will add highly focused gas assets to the Forest portfolio to which we believe we can add significant value by reallocating capital, generating free cash flow, and increasing our presence in areas like East and South Texas. We are extremely pleased to welcome Houston Exploration's employees, most of whom will be located in our new Houston office and will be focused on projects in the combined companies' South Texas properties. Our team has done a terrific job in acquiring these assets while working on other transactions like our pending disposition of Alaska and the recent debt offering."
Forest also announced today that it has reached an agreement with its commercial banks to amend and restate its credit facilities in connection with the Houston Exploration transaction.
The Initial Borrowing Base under the credit facilities will be $1.4 billion, and the term of the facilities has been extended to June 6, 2012. Commitments for the global facility will consist of a U.S. facility of up to $850 million and a Canadian facility of up to $150 million for a total of $1 billion. As of April 30, 2007, Forest had $167 million drawn on its global credit facility.
7.25% SENIOR NOTES DUE 2019
Forest also announced today that it has closed its previously announced private placement of $750 million of 7.25% Senior Notes due 2019. Forest plans to use the net proceeds from the offering to finance a portion of the cash consideration associated with the Houston Exploration acquisition.
Forest Oil Corp. is engaged in the acquisition, exploration, development, and production of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in Alaska, Arkansas, Colorado, Louisiana, New Mexico, Oklahoma, Texas, Utah, and Wyoming, and in Canada.
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