Unocal to Sell 70 Fields to Forest Oil

Unocal Corp. has agreed to sell 70 oil and natural gas fields in the Gulf of Mexico region to Forest Oil Corp. for $295 million, making good on a pledge to trim domestic operations and pay down debt.

The El Segundo company said Sunday that the properties represented the bulk of those earmarked for sale in June, when it announced plans to thin out holdings and “improve the profitability and sustainability” of its continental U.S. businesses.

Unocal, a company focused on oil and gas exploration and development, said the fields were in the Gulf of Mexico and onshore in Louisiana. They have oil and natural gas reserves equal to about 34 million barrels, and are able to produce the equivalent of about 18,000 barrels of oil a day.

Denver-based Forest said Unocal agreed to provide natural gas price hedges through December 2005 as part of the deal. Forest also agreed to give Unocal options to conduct deep exploration on some of the properties in the transaction.

Unocal expects to complete the sale by the end of October, and then sell another 20 assets to other buyers in the fourth quarter. The company said it would use the proceeds to reduce its debt and to help fund other projects.

The sales will trigger pre-tax charges of $30 million related to the sale to Forest and $18 million related to the expected fourth-quarter sales.

Unocal said it also would book a special item charge stemming from expected employee cuts, but would not know the amount until Forest decides how many employees it would retain.

Unocal shares fell 16 cents to $31.72 on the New York Stock Exchange.