With the sale of the Zama assets to Apache Corp. coming to a closelast week, Phillips Petroleum announced yesterday that the companyexpects to realize approximately $470 million in after-tax proceedsfrom the $490 million dollar sale (see Daily GPI, Jan. 2, 2000).
The sale, which was originally announced in the beginning ofDecember, does not mark an exit from Canada, Phillips said (see DailyGPI, Dec. 7, 2000). The company said itwill keep its presence in the north country through variousnon-operating interests in Alberta and British Columbia.
Phillips also expects the sale to result in an additional $110million in net income for the fourth quarter of 2000. Proceeds fromthe transaction, as well as strong cash flow from operations bringsthe company’s year-end 2000 debt to approximately $6.9 billion. Thecompany said this resulted in a debt-to-capital ratio of about 51%,which Phillips points out is much lower than the 61% it postedfollowing the company’s acquisition of all of Arco’s Alaska businesseslast April (see Daily GPI, April 27,2000).
The Zama properties in the sale are comprised of about 212,000net developed acres and 275,000 net undeveloped acres. It includesthree sour gas plants with a total capacity of 150 MMcf/d, 13compressor stations and 150 miles of owned and operated gasgathering lines, 786 square miles of proprietary 3-D seismic and4,155 miles of 2-D seismic. The Zama area is 59% natural gas and isexpected to have an 11-year reserve life.
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