Unocal's Spirit Energy 76 completes equity trade with Tom Brown, Inc., for Rocky Mountain oil and gas assets
Sugar Land, Texas, July 6, 1999 -- Unocal Corporation's Spirit Energy 76 unit today said that it completed the previously announced trade of most of its Rocky Mountain oil and gas assets to Tom Brown, Inc.
Unocal received 5.8 million shares of Tom Brown, Inc., common stock (approximately 16.5 percent) and $5 million for the properties. Subject to certain restrictions and conditions, Unocal has the option to increase its stock ownership up to 19.5 percent through open market purchases. The sale agreement also entitles Unocal to nominate one director to the Tom Brown board of directors.
Unocal said it expects the deal to be accretive to reserves and production in the long-term as Tom Brown, Inc., applies its aggressive exploration and development activities to the Unocal assets. For the short-term, the transaction will slightly dilute Unocal's reserves and production.
Tom Brown received most of Spirit Energy's Rocky Mountain assets. These include approximately 35 net wells that recorded first quarter 1999 net daily production of 29 million cubic feet of natural gas, 239 barrels of oil and 29,065 gallons of gas plant liquids. In addition, Tom Brown received proved reserves of 89 billion cubic feet equivalent of natural gas and about 65,000 undeveloped acres located in Colorado, Utah, Wyoming and North Dakota.
The assets also include the Lisbon Cryogenic Processing Plant located in Moab, Utah, that removes hydrogen sulfide, carbon dioxide and nitrogen from the natural gas produced in southeastern Utah. The plant markets residue gas, natural gas liquids and molten sulfur and is one of only seven plants in the United States that produce liquid helium.
The effective date of the transaction was Jan. 1, 1999. This resulted in a net cash payment to Tom Brown reflecting the net operating results of the Unocal properties since the effective date.
The Tom Brown stock received by Unocal is unregistered and subject to certain restrictions on transfer. Tom Brown's common stock closed Friday at $14.9375 on the NASDAQ.
Tom Brown, Inc., is engaged in the exploration for and the acquisition, development, production and sale of natural gas and crude oil in the U.S. The company reported first quarter 1999 net production of 119 million cubic feet equivalent per day of natural gas and net reserves (year-end 1998) of more than 406 billion cubic feet equivalent.
Spirit Energy 76, Unocal Corporation's U.S. Lower 48 exploration and production unit, has major operations onshore in Texas and Louisiana and on the Gulf of Mexico shelf, in addition to a significant presence in the Gulf of Mexico deepwater. 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.
Forward-looking statements regarding business transactions, market activity, reserves and future production 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: July 1999