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Unocal gets $190M for producing properties Sale to Black Stone Minerals part of Unocal strategy realigning assets Allen Baker Petroleum News Contributing Writer
Unocal Corp., betting on success in big international projects, continues to sell assets and shift its attention away from traditional producing regions in the United States.
The latest move was the sale of domestic producing interests that net about 2,250 barrels of oil equivalent daily. That amounts to less than half a percent of Unocal’s worldwide production. Still, in conjunction with other such sales, the effects are being felt in production numbers for Unocal, based in El Segundo, Calif. Package of assets sold The package of assets is being sold to Black Stone Minerals Co. LP for about $190 million. Included are various royalty interests, minor working interests, and subsurface mineral rights for 3.3 million net acres, mostly in Louisiana, Mississippi, Arkansas and Alabama.
The properties are being sold by Unocal subsidiary Pure Resources, Unocal said March 11. The sale is expected to close in the second quarter.
Unocal last fall sold properties in the Gulf of Mexico to Forest Oil that produce 80 million cubic feet of gas daily, and hold reserves of 150 billion cubic feet. Forest paid roughly $260 million for those properties.
The company also sold off its stake in Tom Brown, and has sold other North American producing fields. Production shows declines With Unocal divesting assets in the Lower 48, the company’s production numbers are reflecting those sales, as well as general field declines. In the 2003 fourth-quarter, Unocal’s total worldwide production dropped to 420,000 barrels of oil equivalent from 451,000 boe a year before, a 7 percent decline.
For North America, the numbers were more dramatic. Liquids flow slipped from 87,000 barrels daily in the 2002 fourth quarter to 75,000 daily barrels in the final quarter of 2003. That’s a 14 percent drop. Natural gas production dropped 20 percent, to 655 million cubic feet daily from 818 mmcf a year earlier. Unocal was number 17 in Petroleum News’ list of the top 35 North American E&P spenders.
Production from the big international and deepwater Gulf of Mexico projects isn’t expected to really kick in until 2005, the company says. So first quarter production is being estimated at 410,000 to 420,000 boe daily, and the full year figure expected to average 450,000 boe daily, about the same as in the last quarter of 2002.
It’s the international arena where Unocal is putting its money and attention. Big projects include the West Seno deepwater project in Indonesia, as well as developments in Azerbaijan, Thailand, Indonesia and Bangladesh.
The deepwater Gulf also is set to play a role in Unocal’s future.
One strike in the deep Gulf this past winter, at the St. Malo prospect, looks very promising with more than 450 feet of net oil pay. Unocal is operator and holds a 28.75 percent interest there. The Harvest and Red Pepper projects in the Gulf also look like winners.
The company’s decision to shift overseas and to the deep Gulf also reflects a relative lack of success in finding attractive new deposits in the more traditional North American exploration areas. Cheaper finding costs, Alaska bright spot Unocal’s international operations had finding, development and acquisition costs of less than $5 a barrel in 2003, while North American reserves came in at $9.88 a barrel, with especially disappointing results in the Gulf of Mexico shelf, leading Unocal to slash exploration spending in that region by 50 percent. Alaska operations were the bright note in Unocal’s domestic exploration in 2003.
Unocal’s international reserves at the end of 2003 amounted to 1,182 million barrels of oil equivalent, two thirds of the company’s total reserves.
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