Forest Oil Corp. (NYSE: FST) has closed on the previously announced sale of its properties in South Texas for net cash proceeds of approximately $307 million, after customary adjustments to reflect an effective date of January 1, 2013 and the hold-back of certain properties, valued at approximately $14 million, for which required consents-to-assign have not yet been obtained.
In January Forest Oil entered into a definitive agreement to sell all of its properties located in South Texas, excluding its Eagle Ford Shale oil properties, for after-tax cash proceeds of $325 million. The properties produced 66 MMcfe/d (86% natural gas) during the third quarter of 2012, had estimated proved reserves of 272 Bcfe (85% natural gas) as of December 31, 2011, and generated approximately $60 million of lease-level income during 2012.
A subsequent closing on these hold-back properties is expected to occur within 90 days. The proceeds from this sale will be used to redeem the remaining $300 million principal amount outstanding of the company’s 8.5% Senior Notes due 2014.
In connection with the closing of this transaction, the global borrowing base under Forest’s credit facilities has been reduced to $900 million.