By OGJ editors
HOUSTON, May 24 -- Forest Oil Corp. Sunday reported signing an agreement to acquire all of the outstanding common shares of Wiser Oil Co. of Dallas for a total cash consideration of $330 million, or $10.60/share. The deal includes the assumption of about $160 million in debt.
Denver-based Forest said the deal will provide the following benefits:
-- An increase in its Canadian business unit's estimated proved reserves and production by a respective 35% and 67%.
-- An increase in its Western business unit's estimated proved reserves and production by a respective 29% and 26%.
-- A "significant" addition to its Gulf Coast and Canadian exploration acreage.
Forest gains Wiser assets
Forest said it "can profitably exploit and add value to the Permian basin assets and reduce field operating costs." In addition, the acquired Canadian assets have "numerous infill drilling locations for exploitation and the Wild River area contains several multipay exploration opportunities similar to Forest's successful Narraway field in the Alberta foothills," it said.
As of yearend 2003, Wiser's reported estimated proved reserves were 191 bcfe, of which 51% were natural gas. Wiser produced about 64 MMcfe/d in the first quarter of this year.
About half of Wiser's production and nearly one third of its reserves were located in Canada at yearend 2003. Also at yearend, 20% of Wiser's production and 45% of its reserves were in the Permian basin. About 85% of Wiser's estimated proved reserves were classified as proved developed.
Craig Clark, Forest's president and CEO, said that his company was pleased to be obtaining "high quality Canadian assets" at "an attractive price given the intense competition for Canadian assets lately."
Most of the acquired assets are in the same reservoirs, the same trends, and the same areas as Forest's existing assets, Clark added.
Forest plans to finance the acquisition through a combination of equity, debt, and cash on hand. Forest also plans to divest at least $100 million of nonstrategic assets, mainly from its existing portfolio, in the US and Canada.
The boards of both Forest and Wiser have unanimously approved the transaction. The offer is expected to close at the end of the second quarter or early in the third quarter.