Unocal completes investment in Northrock: Expands North American natural gas holdings
El Segundo, Calif., May 14, 1999 - Unocal Corporation today said its Unocal Canada Resources subsidiary has completed its investment of C$265 million (approximately US$180 million) to acquire approximately 45.6 percent of Calgary-based Northrock Resources Ltd.
The investment was effected by the acquisition of 10 million shares of Northrock common stock at C$14 per share pursuant to a partial tender offer to Northrock's shareholders and 7.64 million shares of Northrock common stock at C$16 per share pursuant to a private placement. Of the 12.2 million shares deposited to the offer, 2.2 million shares, or 18% of those deposited, will be returned pro rata to depositing Northrock shareholders.
"The strong support of Northrock shareholders is a clear indication of the value this transaction will create for the shareholders of both companies, and underscores what an attractive fit this investment is for Unocal," said Roger C. Beach, Unocal chairman and chief executive officer.
In addition to Unocal's investment described above, Northrock has the right, until December 31, 1999, subject to Northrock shareholder approval at the annual general meeting, to require that Unocal purchase additional Northrock common shares from treasury at a price of C$15 per share, up to a maximum ownership level of 49.9 percent.
"Northrock has a strong management team and cost-effective, growth-oriented operations," said Beach. Northrock's reserves have grown by 47 percent over the past five years at an average cost of US.71 cents per million cubic foot equivalent. Current reserves are 573 billion cubic feet equivalent on a U.S. basis. Production has grown by 53 percent over the same period and is now at 226 million cubic feet equivalent per day.
"This transaction is another component of Unocal's commitment to increasing exposure to North American natural gas," Beach added. Unocal has a strong and growing natural gas base in the Gulf of Mexico and the Permian Basin, and is also acquiring an equity position in Tom Brown, Inc., in the Rocky Mountains.
Unocal is one of the world's largest independent oil and gas exploration and production companies, with resource development, power plant and pipeline projects in Asia, the U.S. Gulf of Mexico region and Latin America. In Canada, the company currently produces about 7,700 barrels-of-oil-equivalent per day in southwest Saskatchewan and operates the Aitken Creek natural gas storage facility in British Columbia.
Forward-looking statements regarding business and market transactions, and future value in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially as a result of factors discussed in Unocal's 1998 Form 10-K report filed with the Securities and Exchange Commission.
Updated: May 1999