Unocal Plans Spinoff, Acquisition
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Unocal Corp. said Tuesday that it will split off its oil and natural gas exploration operations in Texas and New Mexico into a new company that will buy Titan Exploration Inc.
El Segundo-based Unocal will own 65% of the new company, Pure Energy Resources Inc. Titan holders will swap each of their shares for 0.4302 of a Pure Energy share. Midland, Texas-based Titan has a market value of about $133 million, based on Tuesday’s closing price.
Texas and New Mexico fields provide about 5% of Unocal’s worldwide oil production and 4% of its gas. Unocal looks for petroleum mainly in the Gulf of Mexico and Asia, where fields are larger and more profitable. Pure Energy will have reserves of 175 million barrels of oil equivalent and production of 40,000 barrels a day.
The companies expect to complete the transaction in the first quarter.
Titan, which had sales of $73 million in 1998, returned to profitability in the third quarter after six consecutive money-losing quarters caused by low oil prices. It went public three years ago at $11 a share.
Titan’s shares fell 25 cents to close at $3.63 on Nasdaq. Unocal shares fell 64 cents to close at $33.25 on the New York Stock Exchange.
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