By OGJ editors
HOUSTON, Sept. 12 -- Forest Oil Corp., Denver, is spinning off its Gulf of Mexico assets into a Forest stockholder-owned company, Spinco, which in turn is being acquired by Mariner Energy Inc., Houston, in a stock-for-stock transaction.
Forest will be left with onshore assets only in both conventional and nonconventional plays. The transaction's value was not immediately available. Closing remains subject to approval by US regulators and is expected by early 2006.
The Gulf of Mexico reserves represent 24% of Forest's total proved reserves, analysts said. The transaction is expected to be tax free to Forest and its shareholders.
Terms call for Forest shareholders to retain all existing Forest stock and to receive 0.8 share of Mariner stock for each Forest share. Upon closing, Forest shareholders are expected to own 58% of Mariner stock on a diluted basis. Spinco will pay Forest $200 million, which Forest plans to use to pay down debt.
Forest managers and directors will continue in their current positions with Forest, while Mariner managers will continue in their current positions with Mariner. After closing, Mariner's board will consist of its five directors, plus two new directors mutually chosen by Forest and Mariner.
With its Gulf of Mexico assets more than doubling after the transaction, Mariner expects to become publicly traded. It now is private.
