Spirit Energy 76, Unocal Corp.’s U.S. Lower 48 exploration andproduction unit, signed a letter of intent to trade most of itsRocky Mountain oil and gas assets for 5.8 million shares of TomBrown Inc. and $5 million in cash. The total value of the deal wasabout $76 million. Unocal will hold 16.52% of the outstandingcommon stock of Tom Brown based on the number of shares to beissued. The agreement also gives Unocal a seat on Tom Brown’s boardand the option to increase its ownership up to 19.5% through openmarket purchases.

“Tom Brown is a focused Rocky Mountain player whose substantialexploratory position combines well with Unocal’s assets in theregion. The trade will give both companies greater participation inthe North American natural gas value chain,” said John T. Donohue,president of Spirit Energy 76. “This transaction provides theopportunity to realize good value for these assets for Unocalstockholders and participate in the growth potential of Tom BrownInc. At the same time, a spin-off of the Rocky Mountain propertieswill allow our management team to focus on core growthopportunities in the Gulf of Mexico, Gulf Coast and Permian Basin.”

The transaction involves about 35 net wells with 1998 net salesof 18 MMcf/d, 290 barrels of oil/d, and 92,000 gallons of gas plantliquids/d. In addition, the transaction includes proved reserves ofabout 89 Bcfe of gas and about 65,000 undeveloped acres inColorado, Utah, Wyoming and North Dakota. Also included in the dealis the Lisbon Cryogenic Processing Plant located near Moab, UT. Itis expected all of Spirit Energy’s local work force of about 50employees will be retained by Tom Brown. The deal will be slightlydilutive to Unocal reserves and production in the short term but isexpected to be accretive as Tom Brown applies aggressiveexploration and development activities to the Unocal assets.

Joe Fisher, Houston

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