Newhall Land & Farming said it has scrapped for now its proposed $32.9-million acquisition of Newhall Resources after learning that the limited partnership's oil and gas reserves are substantially less than it thought.
But Newhall Land said it may make a lower offer for the partnership. Newhall Land wants to buy the limited partnership to obtain mineral rights Newhall Resources holds to land in California. That would give Newhall Land, a real estate limited partnership, the right to develop the property.
Newhall Resources was spun off by Newhall Land in 1983. Both firms are based in Valencia and are limited partnerships with units that are publicly traded on the New York Stock Exchange.
In October, Newhall Land offered $7.50 for each of Newhall Resources' 4.4 million units.
But the firm let the offer expire Dec. 31 after Newhall Resources disclosed that an oil and gas consulting firm found it had only 500,000 barrels of oil and 7.5 billion cubic feet of natural gas. Those figures are down 43% and 52%, respectively, from its estimated reserves at the end of 1986.
Stuart R. Mork, Newhall Land treasurer, said the Newhall Resources reserves were substantially below what Newhall Land thought they would be when the offer was made. He declined to speculate on whether the reserves were so low because the oil has been produced or because the reserves were overestimated in 1986.
Robert Wilke, Newhall Resources' general partner and an executive vice president of Newhall Land, could not be reached for comment.