Amoco has nearly wrapped up its $1.9 billion divestment of NorthAmerican exploration and production properties. “These divestmentsallow us to focus our resources on the most promising producingareas in our exploration and production portfolio, which has givenus a higher quality asset position in North America,” said L.Richard Flury, executive vice president for exploration andproduction. “We believe this rationalized asset position is a steptoward reaching our corporate goal of 15% return on capitalemployed by 2001.”

The sale of U.S. oil and gas producing properties will generate$1.55 billion in cash, securities and properties. The divestmentprogram was announced in June. The remaining $380 million inproceeds resulted from the recently closed divestments of Amoco GasCo. (gas pipeline assets in Texas), Canmar (Amoco’s arctic marinedrilling concern) and Canadian exploration and production assets.

“I attribute the premiums received for these assets to anextensive marketing effort coupled with a competitive bid process,coinciding with one of the most favorable market conditions for theoil and natural gas industry in the past decade.”

Domestic producing assets were sold in seven separate regionalpackages located primarily in Alabama, Wyoming, Colorado, NewMexico, Oklahoma and select Gulf Coast locations. In addition tomature producing assets, some of the packages included operatingcenters, processing plants and gathering systems and otherinfrastructure. The assets represent about one-third of Amoco’sdomestic exploration and production properties, accounting forabout 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 650MMcf/d, 387-mile Texas pipeline and a 110 MMcf/d processing plantadjacent to Amoco’s Texas City refinery. The pipeline system servesthe Amoco refinery, two Amoco chemical plants and other industrialcustomers in the Houston Ship Channel, Texas City and Bayportareas. The deal gave Tejas access to the largest gas consumingmarket in the United States.

Howell Corp. agreed to buy Amoco producing properties inWyoming, Montana, Colorado and North Dakota for about $302.5million. The deal included interests in 2,449 gross wells withestimated total proved reserves of 124 Bcf of gas and 39 millionbarrels of liquids.

San Francisco-based HS Resources (HSR) agreed to acquire all ofAmoco’s upstream oil and gas properties in the Denver-JulesburgBasin of northeast Colorado in a deal worth about $333 million incash, stock and transfer of certain HSR Midcontinent producingproperties.

Tulsa, OK-based Gothic Energy agreed to pay $237.5 million incash plus warrants for the purchase of Gothic stock for Anadarkoand Arkoma basin proved reserves of 230 Bcfe.

Cross Timbers Oil of Fort Worth, TX, agreed to buy 170,000 netacres in the San Juan Basin of New Mexico for $252 million. Thedeal included warrants for Amoco to buy Cross Timbers shares. Thesale included an estimated 258.6 Bcf of proved reserves.

Energen Corp. subsidiary Taurus Exploration bought a package ofcoalbed gas reserves in the Black Warrior Basin of Alabama fromAmoco for $72 million, including 90 Bcf of reserves.

Amoco’s North American operations will continue to generateabout 60% of its worldwide oil and gas production, and Amocoremains the No. 1 private gas producer in North America. “As aresult of these divestitures, Amoco will be focusing its resourceson areas where we can distinguish ourselves with a smaller, butfinancially superior asset base,” Flury said. “Our North Americanupstream business will remain an important part of the company’sworldwide exploration and production portfolio by significantlycontributing to Amoco’s earnings well into the next century.”

Amoco’s North American exploration and production portfolio nowconsists of areas where the company is, in many cases, either thefirst or second oil or gas producer. Core areas of the portfolioinclude Western Canada, Overthrust and Green River Basin, HugotonBasin (including Crescendo), San Juan Basin, Arkoma Basin, PermianBasin (Altura), East Texas and South Louisiana, Louisiana’sTuscaloosa Trend and the Gulf of Mexico.

Joe Fisher, Houston

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.