ARCO, Mobil Complete Exchange of Oil and Gas Properties in California and Gulf of Mexico

abarrelfullabarrelfull wrote on 10 Aug 2012 06:19

02 November 1998

LOS ANGELES — ARCO (NYSE: ARC) and Mobil have completed an exchange in which ARCO's heavy oil properties in California's San Joaquin Valley were exchanged for certain Mobil oil and gas properties in the Gulf of Mexico.

ARCO, in turn, transferred the Gulf of Mexico properties to Houston-based Vastar Resources, Inc., (NYSE: VRI) through the sale of a wholly-owned subsidiary for $470 million. ARCO owns an 82.2% interest in Vastar, a major oil and gas producer in the Gulf of Mexico and onshore Gulf region.

"This exchange complements ARCO's stated objective to focus on a few specific regions where we can have a significant competitive and cost structure advantage. The Gulf of Mexico is one of those regions for ARCO, and the San Joaquin Valley is not," ARCO Executive Vice President J Kenneth Thompson said. "Through Vastar Resources, ARCO holds a premier position in the Gulf of Mexico, and this exchange further strengthens that position while reducing ARCO's costs."

The Gulf of Mexico properties include working interest in 23 producing fields and 93 platforms, as well as interests in over 80 lease blocks in the western and central Gulf of Mexico. Most of the production is natural gas and is expected to average 180 million cubic feet of gas equivalent per day in 1999, net of divestitures. As of 1 July 1998, net proved reserves were 360 billion cubic feet of gas equivalent with substantial future potential. In addition, Vastar acquired interests in pipelines, gathering lines and a shorebase in Cameron, LA.

California properties transferred to Mobil include five fields in Kern and Los Angeles counties and an interest in a cogeneration facility in the Midway-Sunset field in Kern County. Net production from the fields is approximately 37,000 barrels per day of oil and 6 million cubic feet per day of gas. Proved reserves totaled approximately 160 million barrels of oil equivalent.

As a consequence of the exchange, ARCO's Bakersfield Calif office will be closed and some 270 professional and hourly ARCO employees will be affected. The exchange resulted in an after-tax charge of $109 million, as reflected in ARCO's third quarter results announced last week, but is expected to be accretive to earnings starting in 1999.
The effective date of the transaction is 1 July 1998, with official closing on 31 October 1998.

In addition to its assets in the Gulf of Mexico and Gulf region, ARCO has significant operations on the North Slope of Alaska, the Permian Basin, China, Indonesia, the North Sea and North Africa.

[Some of the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. Actual results could differ materially based on numerous factors, including the realized level of crude oil and natural gas production and other risks detailed from time to time in the company's SEC reports, including the 1997 report on Form 10-K.]

Related News

Looking for information on the E&P sector?

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License