Unocal and Forest Oil Complete Joint Venture
Unocal Corporation said it has completed the previously announced transaction to form a 50-50 venture with Forest Oil Corporation related to oil and gas properties located in the central Gulf of Mexico. The transaction was effective Oct. 1 and closed on Nov. 30.
Under the terms of the transaction, Unocal acquired half of Forest Oil's interests in South Marsh Island and a portion of the Vermilion areas offshore central Louisiana for $117 million in cash. Unocal will operate the jointly owned properties and intends to fully exploit and explore these properties and other leases in the Gulf of Mexico.
"This unique venture provides us an expanded set of field upside and exploratory opportunities that we will quickly address with our extensive 3D data base and existing subsurface teams," said Ken Butler, vice president of Unocal's Gulf Region USA business unit. "Additionally, we will be able to leverage our low operating and drilling costs in the Gulf of Mexico and benefit both Forest Oil and Unocal."
Butler said the company's evaluation of the properties involved in the transaction resulted in an identified gross resource base of 44 million barrels-of-oil equivalent (264 billion cubic feet of natural-gas-equivalent) with considerable upside potential. Based on its strong operating cost efficiency, Unocal forecasts $8 million to $12 million in savings to the venture next year.
"We continue to pursue similar deals, allowing us to expand our profitable exploration and production program on the Shelf," Butler said.