Unocal, Nuevo Energy sign agreement for sale of Unocal's California oil and gas assets
El Segundo, Calif., Feb. 20, 1996 -- Unocal Corporation said today that its Union Oil Company of California subsidiary and Nuevo Energy Company signed an asset purchase agreement for the sale of Unocal's crude oil and natural gas assets in California.
Torch Energy Advisors Inc. negotiated the sale on behalf of Nuevo, a company Torch formed in 1990. Torch's operating subsidiary will operate the Unocal properties for Nuevo. Torch and Nuevo are based in Houston, Tex.
Under the terms of the agreement, Unocal will receive approximately $500 million from the sale of the properties. The final cash settlement will be set at the closing, which is expected by the end of March. In addition, beginning in 1998, the company could receive further payments that are contingent upon the price per barrel from the properties' future oil production.
"The proceeds from this sale will give Unocal additional flexibility to pursue significant growth opportunities in Central and Southeast Asia, as well as reduce current debt levels," said Roger C. Beach, Unocal chairman and chief executive officer.
The sale includes Unocal's interests in 68 oil and gas fields, including 11 producing platforms off the California coast in state and federal waters. Unocal's average net daily production from the upstream assets in the proposed sale was 27,000 barrels of oil and 59 million cubic feet of gas during 1995. The sale of this production is not expected to have a material effect on the company's future operating earnings.
The sales agreement is subject to certain regulatory consents, approvals and waiting periods.
Torch currently operates the Point Pedernales unit offshore California and several onshore fields near Vandenberg Air Force Base in Santa Barbara County that were purchased from Unocal in 1994.
Unocal has approximately 600 employees involved in its California oil and gas operations. While many of those employees will be offered positions with Torch or at other Unocal operations, some layoffs are expected.
Nuevo (NYSE: NEV) is an independent oil and gas company, engaged primarily in the acquisition, development, production and exploration of oil and gas properties. Torch Energy Advisors Inc. is an asset management company offering services through investment management, property management and oil and gas marketing.
Updated: February 1996