Forest Oil, which last year bought oil and natural-gas producer Houston Exploration for about $1.6 billion, agreed to acquire assets for $285 million mostly in its core Arkansas, Louisiana and Texas areas.
The assets are estimated to have proved reserves of 110 billion cubic feet of gas equivalent and produced 13 million cubic feet a day in 2007, Denver-based Forest Oil said Tuesday in a statement. The purchase from an unnamed private company includes 47,000 net acres on which Forest said it has identified more than 500 drilling locations.
Forest stock rose $3.53 to $52.49 in New York Stock Exchange composite trading.
“It’s very positive, a good bolt-on acquisition,” David Tameron, an analyst at Wachovia Corp. who rates the shares “outperform” and doesn’t own them, said in a telephone interview from New York.
The transaction, expected to be done in the second quarter, will be financed with cash on hand and a credit facility, Forest said. The deal will almost double Forest’s land in east Texas and north Louisiana to more than 140,000 gross acres, the company said.
Forest also said it made a natural-gas discovery in the Utica Shale in Quebec’s St. Lawrence lowlands, where it has accumulated about 269,000 acres in two years. Two vertical test wells produced as much as 1 million cubic feet of gas equivalent a day, Forest said.
Forest, which estimates the land may hold about 4 trillion cubic feet of gas, expects first production next year. The company plans to drill three horizontal wells this year.
The company may sell some “lower-growth” assets in its western business unit, which includes Wyoming, Colorado, Texas and Utah, chief financial officer David Keyte said.
