April 12 Forest Oil Corp said Schlumberger Ltd, the oilfield services sector leader, will pick up a 50 percent working interest in the oil and gas producer's Eagle Ford shale acreage by paying $90 million towards future drilling costs.
Debt-heavy Forest oil has raised $600 million from asset disposals since last July to improve liquidity. The company had $1.86 billion in debt and $1.1 million in cash and equivalents as of Dec. 31, according to Thomson Reuters data.
Forest, whose cash flows have decreased due to weak natural gas prices, has turned attention to liquids output in the Texas-Oklahoma Panhandle, East Texas and Eagle Ford Shale in Texas.
Forest, which will operate the Eagle Ford drilling program, expects to spend the $90 million by the end of 2014, it said in a statement on Friday.
Forest expects its share of capital expenditure in the development plan to be about $125 million in 2013, and $220 million in 2014.
Beyond that, Forest and Schlumberger will share future drilling costs equally.
The company plans to increase drilling to four rigs by the end of the third quarter, from one to two rigs currently. Sales volumes in 2014 are expected to scale up to 6,500 boe/d (barrels of oil equivalent per day), from 1,600 boe/d in 2012.
As part of the agreement, Schlumberger will provide drilling, completion and lifting technologies and reservoir management technologies, besides other services.
Forest Oil shares, which have more than halved in the past year, were marginally down at $5.00 on the New York Stock Exchange on Friday. Schlumberger's stock was down less than 1 percent at $76.48.