The Australian-owned oil and gas company, Chancellor Group, saysit has signed a letter of intent to acquire from Union PacificResources a half-interest in the Deadwood Field in East Texas for$35 million. The announcement comes on the heels of one made lastFriday by UPR that it had agreed to sell its interests in certainSouth Texas oil and gas properties to Collins & Ware Inc. for$148 million.

The two actions are part of a de-leveraging outlined last Springby UPR as a result of its $3.5 billion purchase (includingassumption of debt) of Norcen Energy. At the time UPR said itintended to sell $500-$700 million in assets to cut its debt toequity ratio, which ballooned to 73% following the Norcen deal fromabout 40%. Properties for sale were listed in April on theInternet.

In May UPR sold its interests in the Wattenberg area ofColorado’s Denver-Julesberg Basin to Denver-based United StatesExploration Inc. for $41 million. And on Aug. 24 UPR sold itsinterest in Matagorda Block 623 to Enron Oil and Gas for $158million. The company’s asset sales program is continuing forproperties in Canada, the Gulf of Mexico, South Louisiana, EastTexas and the Rockies. as well as some overseas properties.

Chancellor said the East Texas purchase should be completed inthe next week with financing from two to-be-named investors. TheDeadwood Field property UPR owns 50-50 with Texaco includes 82producing oil and gas wells and proven reserves estimated at 17.5Bcf of gas and 349,000 barrels of oil. Non-proven reserves areestimated at 217,000 barrels of oil, 12.8 Bcf and 574,000 barrelsof gas liquids. The field is near Carthage in Panola County.

Chancellor Group, with its office in Las Vegas, already ownssome U.S. properties and will shortly be opening offices in Denverand Dallas.

With the Canadian-based Norcen UPR said it was acquiring newcore areas in Canada and Latin America plus a significant strategicexpansion in the Gulf of Mexico including the deep water area.

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