GO
Loading...

Enter multiple symbols separated by commas

Forest Oil to Buy Houston Exploration for $1.5 Billion

Forest Oil said it has agreed to acquire Houston Exploration for $1.5 billion in cash and stock.

The purchase price includes 23.6 million shares and $740 million in cash. Houston Exploration shareholders will receive 0.84 of a Forest share and $26.25 in cash for each share of Houston Exploration they own.

Forest Oil will also assume about $100 million in Houston Exploration debt.

With an estimated value of $52.47 per share, the deal represents a 7.8% premium over Houston Exploration's Friday closing price of $48.69 Friday on the New York Stock Exchange.

The combined company would have estimated proved reserves of about 2 trillion cubic feet of natural gas equivalents, about 70 percent of which would be natural gas.

The deal will strengthen Forest Oil's North American asset base with some 3,200 additional drill sites, said H. Craig Clark, the company's president and chief executive in a statement.

Houston Exploration said the takeover represents a "successful conclusion" to a strategic review begun last year.

Forest Oil also said it plans to divest its Alaska business this year to reduce its debt and narrow its geographic focus.

The boards of both companies have approved the transaction, which still requires shareholder and regulatory approvals. The deal is expected to close in the second quarter.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • CEO discuss the 'Buffett factor'

    John Stumpf, Wells Fargo chairman & CEO; Kenneth Chenault; American Express chairman & CEO; Ginny Rometty, IBM chairman & CEO; and Muhtar Kent, Coca-Cola chairman & CEO, discuss their relationships with Warren Buffett and marvel at just how easy it's been to communicate with him.

  • Rometty on Watson: He never stops learning

    IBM CEO Ginny Rometty talks Watson, and how it's going to help people make decisions. It never stops learning, she says. Rometty also discusses the company's dividend.

  • Why Buffett bought more IBM

    Berkshire CEO Warren Buffett addresses his purchase of more IBM shares and allegations of predatory lending at Clayton Homes.