Monterey Resources Will Buy McFarland

Bakersfield-based Monterey Resources Inc. will buy McFarland Energy Inc., another California oil and natural gas company, for about $106 million in cash. Monterey said it will begin a tender offer to buy all of McFarland’s outstanding shares for $18.55 each. Monterey produces about 50,000 barrels of oil a day and has proven reserves equivalent to about 218 million barrels. Santa Fe Springs-based McFarland produces about 3,700 barrels of oil and 5 million cubic feet of gas a day and has proven reserves of about 20 million barrels of oil. McFarland’s main oil-producing properties are adjacent to Monterey’s operations in Central California. The purchase is expected to result in “substantial” cost savings and add to earnings and cash flow, Monterey said. Shares of McFarland rose $1.75 to close at $18.375 on Nasdaq, while Monterey shares lost 12.5 cents to close at $15.125 on the NYSE.