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UPR Racking Up Property Sales to $382 Million

UPR Racking Up Property Sales to $382 Million

The Australian-owned oil and gas company, Chancellor Group, says it has signed a letter of intent to acquire from Union Pacific Resources a half-interest in the Deadwood Field in East Texas for $35 million. The announcement comes on the heels of one made a little more than a week ago by UPR that it had agreed to sell its interests in certain South Texas oil and gas properties to Collins &amp Ware Inc. for $148 million.

The two actions are part of a de-leveraging outlined last Spring by UPR as a result of its $3.5 billion purchase (including assumption of debt) of Norcen Energy. At the time UPR said it intended to sell $500-$700 million in assets to cut its debt to equity ratio, which ballooned to 73% following the Norcen deal from about 40%. Properties for sale were listed in April on the Internet. Completion of the Chancellor deal will bring the total take for properties sold to $382 million.

In May UPR sold its interests in the Wattenberg area of Colorado's Denver-Julesberg Basin to Denver-based United States Exploration Inc. for $41 million. And on Aug. 24 UPR sold its interest in Matagorda Block 623 to Enron Oil and Gas for $158 million. The company's asset sales program is continuing for properties in Canada, the Gulf of Mexico, South Louisiana, East Texas and the Rockies. as well as some overseas properties.

Chancellor said the East Texas purchase should be completed in the next week with financing from two to-be-named investors. The Deadwood Field property UPR owns 50-50 with Texaco includes 82 producing oil and gas wells and proven reserves estimated at 17.5 Bcf of gas and 349,000 barrels of oil. Non-proven reserves are estimated at 217,000 barrels of oil, 12.8 Bcf and 574,000 barrels of gas liquids. The field is near Carthage in Panola County.

Chancellor Group, with its office in Las Vegas, already owns some U.S. properties and will shortly be opening offices in Denver and Dallas.

With the Canadian-based Norcen UPR said it was acquiring new core areas in Canada and Latin America plus a significant strategic expansion in the Gulf of Mexico including the deep water area.

Ellen Beswick

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