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UNOCAL WILL SHED IMPERIAL VALLEY GEOTHERMAL ASSETS

Dec. 21, 1992

Unocal Corp. last week disclosed it has agreed to sell its Imperial Valley, Calif., geothermal operations to Magma Power Co., San Diego, for $225 million plus working capital. A definitive agreement also covers other U.S. exploratory geothermal assets. In addition to the initial sale price, Unocal will receive as much as $15 million in contingent payments from Magma. They will be based on additions of power generating capacity and a 1% royalty on such additions.

Unocal Corp. last week disclosed it has agreed to sell its Imperial Valley, Calif., geothermal operations to Magma Power Co., San Diego, for $225 million plus working capital.

A definitive agreement also covers other U.S. exploratory geothermal assets.

In addition to the initial sale price, Unocal will receive as much as $15 million in contingent payments from Magma. They will be based on additions of power generating capacity and a 1% royalty on such additions.

Unocal revealed its intent to sell the Imperial Valley assets last summer (OGJ, Aug. 24, Newsletter) as part of a broad restructuring program designed to bolster profits.

However, it will retain certain other geothermal operations in Philippines, Indonesia, and northern California's Geysers area.

WHAT WAS SOLD

Magma, a leading geothermal power company with plants in California and Nevada, will acquire from Unocal three power generating plants with a combined capacity of 80,000 kw and about 43,000 net acres of geothermal leases and fee acreage. Those assets, in the Salton Sea known geothermal resource area, will boost Magma's generating capacity to 240,000 kw.

Plant designations are Brawley, Truckhaven, and Wister.

Unocal also will assign to Magma geothermal leases in prospect areas designated Long Valley, Calif., and Blue Clay and New York Canyon, Nev.

The sale contract is to be effective Dec. 31, with the trade expected to close no later than Mar. 31, 1993. All net cash flow from the acquired assets will go to Magma starting Jan. 1, 1993.

Unocal figures after tax proceeds from the sale at about $196 million, excluding working capital. It has realized $365 million after tax this year from asset sales.

The company plans to focus its geothermal projects in Indonesia, where it is developing its Salak prospect and negotiating to explore and develop a second "significant" geothermal resource area in Sumatra. Sales of Salak power to the first 110,000 kw plant are to begin late in 1993, with commercial production to commence in first half 1994.