Unocal sells most of Tom Brown stake

Allen Baker

Petroleum News contributing writer

Unocal Corp. has sold off most of its stake in Tom Brown Inc., and plans to get rid of the rest. The sale of 4.9 million shares in a Sept. 16 public offering will give Unocal net proceeds of about $120 million, with $45 million of that to be recorded as a pre-tax gain in the current quarter. Unocal, based in El Segundo, Calif., plans to sell the 875,000 shares remaining in its Tom Brown stake after a 90-day lockup period.

The shares were held by Unocal subsidiary Chicago Carbon Co., which formerly owned nearly 15 percent of Denver-based Tom Brown. The shares brought $25.75 a piece in the public offering, made by Tom Brown.

Unocal says the proceeds will be used to pay down debt.

The sale is part of a broader effort by Unocal to simplify its upstream business by unwinding minority stakes in other energy companies. Production associated with the investments sold this year amounted to about 8,500 barrels of oil equivalent daily. The sales reduce Unocal’s proved reserves by about 34 million BOE, the company said.

The Tom Brown sale will not affect Unocal’s debt rating, according to a statement from Standard & Poor’s Ratings Services.