Oct. 3 (Bloomberg) -- Forest Oil Corp. agreed to sell oil and natural gas assets in the Texas Panhandle to a business backed by private-equity firm First Reserve Corp. for $1 billion -- more than the selling company’s total market value.
The sale to Templar Energy LLC includes the equivalent of 517 billion cubic feet of gas in reserves and daily production of about 100 million cubic feet, Forest Oil said in a statement today. The company announced in July it was seeking a buyer for the assets after receiving unsolicited offers. The assets produce 50 percent gas, 30 percent natural gas liquids and 20 percent oil, Chief Executive Officer Patrick R. McDonald said in August.
Forest Oil, a Denver-based energy company founded 97 years ago, had a market value of $762.5 million at the close today. The shares rose 6.3 percent to $6.75 at 4:59 p.m. in New York.
The transaction “will allow us to significantly reduce long-term debt and greatly enhance our financial flexibility and liquidity,” McDonald said in the statement. McDonald has said sale of the Panhandle assets would let the company focus on holdings in the Eagle Ford, Permian and Ark-La-Tex regions.
The deal is expected to close by Nov. 25 with an Oct. 1 effective date, Forest Oil said in a statement today. JPMorgan Chase & Co. advised the company on the sale.
Templar Energy is an exploration and production company based in Oklahoma City that First Reserve invested in last December, according to the firm’s website.
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