Forest Oil Corp. said Monday it has completed the sale of oil and gas properties in the Permian Basin to SandRidge Energy Inc. for $800 million.
The company also revised its 2009 oil and gas net sales volumes because the sale was completed earlier than anticipated. Denver-based Forest Oil is selling off noncore assets to focus on developing North American tight-gas and shale resources.
Forest Oil plans to use the proceeds from the sale to repay all outstanding borrowings under its U.S. and Canadian credit facilities, and buy back all $150 million worth of its 7.75 percent senior notes due in 2014. The proceeds also will help finance capital expenditures and pay a tax liability of $55 million to $75 million related to the transaction.
With the sale closing, Forest Oil revised its 2009 oil and gas net sales volumes downward by 0.5 billion cubic feet equivalent (Bcfe) to a range of 181.5 Bcfe to 192.5 Bcfe. Forest Oil said it expects the total to be at the lower end of the range.
SandRidge Energy, an independent oil and natural gas company based in Oklahoma City, said the purchase of the properties, which cover more than 90,000 net acres, will increase its leasehold in the Permian Basin to more than 130,000 net acres.
Separately, SandRidge Energy announced the closing of a private placement of 2 million shares of 6 percent convertible perpetual preferred stock to Fairfax Financial Holdings for net proceeds of $200 million.
The announcement was made after the markets closed Monday. Shares of Forest Oil closed up 68 cents, or 3 percent, to $23.02. Shares of SandRidge closed up 10 cents at $9.37.