Forest Oil Corp. has agreed to buy natural-gas and oil properties in Texas and Louisiana from closely held Cordillera Texas LP for about $892.9 million in cash and stock to extend its holdings in the region.
The properties in east Texas, the Buffalo Wallow region in the Texas Panhandle and northern Louisiana have estimated proved reserves equivalent to 350 billion cubic feet of gas and produced an average of 34 million cubic feet of gas equivalent a day in the first half of the year, Denver- based Forest said in a statement Monday.
“These are tight-sands areas where they’ve excelled at getting natural gas out of the ground,” said Biju Perincheril, an analyst at Jefferies & Co. in New York who rates Forest shares a “buy” and owns none. “It’s a good acquisition for them.”
Cordillera will receive $708 million in cash and 3.5 million Forest shares for the properties, according to the statement. The stock portion of the deal was valued at $184.9 million, based on the closing price Friday.
Forest in May almost doubled its holdings in its core regions in Arkansas, east Texas and northern Louisiana with the $281 million acquisition of properties from an unidentified private company.
The latest acquisition will be financed initially from an existing credit facility and subsequently through the sale of “noncore, nonstrategic assets,” the company said.
Forest fell $1.39, or 2.6 percent, to $51.44 in New York Stock Exchange composite trading, joining other producers that declined as gas and oil futures dropped on the New York Mercantile Exchange.
