Cross Timbers Oil Co. killed two birds with one stone recentlyas it sold $63.5 million of non-core assets in various RockyMountain and Midwest areas, then used the proceeds from the sale tobuy Lehman Brothers Holding’s 50% in Spring Holdings Co. The restof the proceeds from the sale were used to pay down debt, thecompany said when it revealed both transactions yesterday. CrossTimbers now owns 100% of Spring Holding Co.
The sale occurred in two parts. In the first segment, CrossTimbers sold a total of $41 million of primarily non-operatedproperties in Oklahoma, the Permian Basin, the San Juan Basin andthe Green River Basin. The sale occurred in two transactions andthe buyers identities were protected. In the second segment of thesale, Spring Resources Inc., a subsidiary of Fort Worth, TX-basedCross Timbers, sold $22.5 million of properties in the Panhandlearea of Texas and in Coal County, OK.
Proved reserves attributable to the properties sold are 70 Bcfand 2.6 million barrels of oil and natural gas liquids. The currentproduction from the properties equals 18 MMcf/d and 800 b/d of oiland natural gas liquids. Cash flow during the first half of 1999was approximately $4.2 million. The company’s well count will bereduced by approximately 2,800 wells, or 30%, through the sale ofthese properties, while decreasing reserves by less than 5%.
“These divestitures mark the completion of a program tocomprehensively review the company’s properties and to select thoseappropriate for sale,” said Bob R. Simpson, CEO of Cross Timbers.”While the large number of wells sold increases the company’sefficiency, the relatively small proportion of reserves soldhighlights the quality and concentration of the company’s remainingreserves in our seven core areas.”
By purchasing the other 50% of Spring Holdings, Cross Timbersfinished a process started last May, when it made the initialinvestment in the company (see Daily GPI, May 19). Cross Timbersacquired Lehman Brothers Holdings’ 50% interest for approximately$44 million. Spring Holding owns interests in about 1,400 producingwells on 340,000 net acres located primarily in the Arkoma Basin ofArkansas and Oklahoma. It currently operates wells representing 85%of the reserve value and has estimated proved reserves of 264 Bcfe,of which 99% is natural gas. Proved developed reserves account for82% of total proved reserves. The company produced 66 MMcf/d in thefirst quarter of 1999.
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