Amoco Finishing $1.9B E&P Divestment
Amoco has nearly wrapped up its $1.9 billion divestment of North American exploration and production properties. "These divestments allow us to focus our resources on the most promising producing areas in our exploration and production portfolio, which has given us a higher quality asset position in North America," said L. Richard Flury, executive vice president for exploration and production. "We believe this rationalized asset position is a step toward reaching our corporate goal of 15% return on capital employed by 2001."
The sale of U.S. oil and gas producing properties will generate $1.55 billion in cash, securities and properties. The divestment program was announced in June. The remaining $380 million in proceeds resulted from the recently closed divestments of Amoco Gas Co. (gas pipeline assets in Texas), Canmar (Amoco's arctic marine drilling concern) and Canadian exploration and production assets.
"I attribute the premiums received for these assets to an extensive marketing effort coupled with a competitive bid process, coinciding with one of the most favorable market conditions for the oil and natural gas industry in the past decade."
Domestic producing assets were sold in seven separate regional packages located primarily in Alabama, Wyoming, Colorado, New Mexico, Oklahoma and select Gulf Coast locations. In addition to mature producing assets, some of the packages included operating centers, processing plants and gathering systems and other infrastructure. The assets represent about one-third of Amoco's domestic exploration and production properties, accounting for about 9% of the company's 1997 U.S. net production.
Among Amoco deals announced late last year:
Tejas Gas bought the stock of Amoco Gas, which operates a 650 MMcf/d, 387-mile Texas pipeline and a 110 MMcf/d processing plant adjacent to Amoco's Texas City refinery. The pipeline system serves the Amoco refinery, two Amoco chemical plants and other industrial customers in the Houston Ship Channel, Texas City and Bayport areas. The deal gave Tejas access to the largest gas consuming market in the United States.
Howell Corp. agreed to buy Amoco producing properties in Wyoming, Montana, Colorado and North Dakota for about $302.5 million. The deal included interests in 2,449 gross wells with estimated total proved reserves of 124 Bcf of gas and 39 million barrels of liquids.
San Francisco-based HS Resources (HSR) agreed to acquire all of Amoco's upstream oil and gas properties in the Denver-Julesburg Basin of northeast Colorado in a deal worth about $333 million in cash, stock and transfer of certain HSR Midcontinent producing properties.
Tulsa, OK-based Gothic Energy agreed to pay $237.5 million in cash plus warrants for the purchase of Gothic stock for Anadarko and Arkoma basin proved reserves of 230 Bcfe.
Cross Timbers Oil of Fort Worth, TX, agreed to buy 170,000 net acres in the San Juan Basin of New Mexico for $252 million. The deal included warrants for Amoco to buy Cross Timbers shares. The sale included an estimated 258.6 Bcf of proved reserves.
Energen Corp. subsidiary Taurus Exploration bought a package of coalbed gas reserves in the Black Warrior Basin of Alabama from Amoco for $72 million, including 90 Bcf of reserves.
Amoco's North American operations will continue to generate about 60% of its worldwide oil and gas production, and Amoco remains the No. 1 private gas producer in North America. "As a result of these divestitures, Amoco will be focusing its resources on areas where we can distinguish ourselves with a smaller, but financially superior asset base," Flury said. "Our North American upstream business will remain an important part of the company's worldwide exploration and production portfolio by significantly contributing to Amoco's earnings well into the next century."
Amoco's North American exploration and production portfolio now consists of areas where the company is, in many cases, either the first or second oil or gas producer. Core areas of the portfolio include Western Canada, Overthrust and Green River Basin, Hugoton Basin (including Crescendo), San Juan Basin, Arkoma Basin, Permian Basin (Altura), East Texas and South Louisiana, Louisiana's Tuscaloosa Trend and the Gulf of Mexico.
Joe Fisher, Houston
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