Unocal Canada Resources plans to conditionally offer C$221million for the 52% of Northrock Resources Ltd. that it does notalready own. The Unocal subsidiary acquired 19.6 million shares ofCalgary-based Northrock in transactions announced in April 1999(see Daily GPI, April 16, 1999).

Northrock has average daily gross production of 160 MMcf, 11,000barrels of crude oil and gas liquids. It holds net proved reservesof 35 million bbl of oil and liquids and 363 Bcf of gas.

Unocal does not expect Northrock’s board to decide until it hasreceived and considered a valuation from an independent appraiser.Accordingly, Unocal does not expect to mail the offer documents toshareholders until early May.

Barry Lane, a Unocal spokesman, said this latest Northrock playwas not intended when Unocal purchased the original interest.Citing rules regarding ongoing tender offers, he refused toelaborate.

The deal will be mostly funded through proceeds gained fromselling a major chunk of its Canadian production to Tarragon Oiland Gas. In April 1998, Tarragon acquired most of the Canadianassets of Unocal Corp. for C$308 million in a deal that gave Unocal27% of Tarragon shares, a C$100 million debenture and three seatson Tarragon’s board. The assets subsequently were sold by Tarragonto Marathon Oil.

Various conditions will have to be satisfied before the offer ismade. Northrock’s board of directors will have to recommendacceptance of the offer to the shareholders, the two will have toenter into a definitive support agreement regarding the offer, andUnocal’s board must approve the deal.

Once the offer is made, the deal will need regulatory approvalsand a minimum of 90% of the Northrock shares not already owned byUnocal in order to close.

Lane said the purchase is important to Unocal’s overall plans.”You have to look at it in the context of a North American gasstrategy. It fits in with the overall continental plan.” OtherCanadian assets owned by Unocal Canada Resources include the AitkenCreek storage facilities and the Calven Pipeline. Overall, Unocal’sCanadian production is 10,000 boe/d, Lane said.

Another part of Unocal’s North American plan was announced lastDecember when it merged its Permian and San Juan assets with TitanExploration, forming a new company called Pure Energy Resources.Titan shareholders are expected to vote on the merger in the nearfuture. On a pro forma basis, the new company will have 175 millionboe in reserves (80% is proved developed producing) with netproduction of 40,000 boe/d. This production consists of 60% naturalgas and 40% oil on a 6 to 1 Mcf per barrel ratio.

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