Spirit Energy 76 reaches definitive agreement on sale of Michigan oil and gas assets
Sugar Land, Texas, Oct. 2, 1998 -- Spirit Energy 76, Unocal Corporation's Lower 48 exploration and production unit, today said that it has reached a definitive agreement to sell substantially all of its oil and gas assets in Michigan to Newstar Energy USA, Inc. and Omimex Energy, Inc., for approximately $37.25 million in cash and 670,000 shares of stock in Newstar Resources, Inc., the parent company of Newstar Energy.
Approximately 20,000 net leasehold acres producing about 2,200 barrels-of-oil-equivalent (BOE) per day are included in the sale. Estimated reserves were not disclosed.
The effective date of the sale will be July 1, 1998, and the transaction is expected to close on or about December 1. Unocal expects to record an aftertax gain of approximately $10 million on the sale in the fourth quarter.
Spirit Energy said that the sale is consistent with its recent efforts to focus more of its primary exploration and production activities onshore in Texas and the Gulf Coast region and offshore in the Gulf of Mexico. Omimex is a private company with business interests in Texas, Michigan, and Colombia.
Michigan-based Newstar Resources Inc. (Nasdaq: NERIF; Toronto NER) is an oil and gas exploration and production company with operations in Michigan, Ohio and Texas.
Newstar and Omimex will share in the acquisition on a 50-50 basis, with the extent of Newstar's participation contingent upon completion of financing, the terms of which are being negotiated. The transaction is also subject to certain regulatory approvals.
Spirit Energy 76 has net production of about 180,000 BOE per day and operates 330 offshore platforms with 2,700 active wells in 355 fields in the Gulf of Mexico region. The unit employs approximately 1,300 people.
Forward-looking statements regarding business activities and transactions in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.
Updated: October 1998