press release

Unocal's Spirit Energy 76 negotiates southeast New Mexico equity trade with Matador Petroleum Company

Sugar Land, Texas, Oct. 22, 1997 -- Spirit Energy 76, Unocal Corporation's U.S. exploration and production unit, today announced the signing of a letter of intent for an equity trade involving its southeast New Mexico oil and gas properties with Matador Petroleum Corporation.

Under the proposed agreement, Spirit Energy 76 will exchange the properties for a 35.5 percent interest in a new holding company, which will also own Matador. The existing stockholders of Matador would own the remaining 64.5 percent of the holding company.

"Our objective with this kind of alliance is to maximize growth and realize full value of non-core assets for our stockholders," said Jack Schanck, president of Spirit Energy 76. "This transaction with Matador will free up resources for Spirit's core strategic areas -- the Gulf of Mexico and Gulf coast."

"This is the first in a series of asset restructuring deals designed to maximize the value of our non-strategic properties," said Ryan Isherwood, vice president of New Ventures for Spirit Energy 76. "Pairing up with an aggressive company like Matador, that is positioned for growth in New Mexico, will enable us to realize the full value of those assets."

Formed in early 1997, Spirit Energy 76's New Ventures Group is responsible for identifying and capturing new opportunities through the use of creative deal structures.

The group is actively seeking equity trades, joint ventures, alliances and acquisitions in the Gulf of Mexico, Gulf coast and Permian Basin areas.

"Matador will be a good steward of the assets Spirit is entrusting to us," said Joseph Wm. Foran, Chairman and CEO of Matador. "Despite the differences in our relative size, we share the same objectives -- growing reserves at a reasonable finding cost and adding value to our shareholders' interests."

The transaction is subject to negotiation of a final agreement, clearance by various regulatory agencies, and the satisfaction of certain other conditions.

Spirit Energy 76 is based in Sugar Land, Texas, and employs approximately 1,300 people. Spirit Energy 76 operates 300 offshore platforms and approximately 2,700 active wells in 355 fields.

Unocal is a leading global energy resource and project development company, with reserves of more than 9.8 trillion cubic feet of natural gas equivalent (1.6 billion barrels of oil equivalent) and major oil and gas production activities in Asia and the U.S. Gulf of Mexico.

Facts In Brief

Spirit Energy 76 Assets To Be Contributed

  • Location: Lea, Eddy and Chaves counties, New Mexico
  • Number of fields: 26 - 11 company operated and 15 operated by others (OBO)
  • Gross acres: approximately 75,000
  • Average net daily production: 4.8 mmcf of gas and 182 barrels of oil per day

Matador Petroleum Background Information

  • Matador is a private, Dallas-based exploration and production company with operations concentrated in New Mexico, Oklahoma and Texas.
  • Number of fields: 78 - 23 company operated and 55 OBO
  • Gross acres: approximately 170,000
  • Average net daily production: 7.5 mmcf of gas and 904 barrels of oil per day

Updated: October 1997