One month after announcing that it was abandoning a potential partnership strategy to help develop its Eagle Ford Shale acreage in favor of a “go-it-alone plan,” Denver-based Forest Oil Corp. said it has entered into an agreement to sell the majority of its East Texas natural gas gathering assets to a subsidiary of Tristate Midstream II LLC for proceeds of $34 million.

As recently as late last month, Forest management had said that doing a deal in the Eagle Ford was a top priority of interim CEO Patrick R. McDonald (see Shale Daily, June 25). But by mid-July McDonald had backtracked (see Shale Daily, July 12). “While discussions continue with parties interested in our Eagle Ford asset, we have identified a go-it-alone plan that is attractive to the company and should allow us to hold approximately 40,000 net acres,” he said in July. “We can then look to monetize a portion of the remaining acreage through small divestitures or farm-outs.”

Without a joint venture partner, Forest plans to hold 40,000 net Eagle Ford acres with a 100% working interest over the next several years, initially with two rigs and eventually with three rigs, the company said. This acreage position has 500 total locations identified based on 80-acre spacing. Employing a two-rig program and the current schedule of drilling and well completions, net sales volumes from the Eagle Ford are expected to exit the year at 3,000 boe/d, from a second quarter 2012 average production rate of 1,000 boe/d, the company said.

In selling the majority of its East Texas natural gas gathering assets to a subsidiary of Tristate, Forest said it can also earn up to $9 million of additional performance payments contingent on future activity. In conjunction with the sale, Forest has entered into a 10-year natural gas gathering agreement with the buyer under which Forest will commit its production from its existing and future operated wells located within five miles of the current configuration of the gathering system.

Forest said the transaction is expected to close on Oct. 31 and is subject to customary closing conditions and purchase price adjustments. The company added that it intends to use the net proceeds from the sale to repay a portion of the outstanding borrowings under its bank credit.