November 30, 2009 / 9:43 PM / 10 years ago

UPDATE 2-Forest Oil to sell Permian assets for $800 mln

* Says to sell assets to SandRidge

* Forest to repay debt using sale proceeds * SandRidge raises 2010 production, capex view

* Forest shares up 4 percent, SandRidge down 8 pct

(Adds details, background)

Nov 30 (Reuters) - Forest Oil Corp FST.N said it agreed to sell its remaining Permian Basin properties to SandRidge Energy Inc’s (SD.N) unit for about $800 million, as it looks to focus on shale assets and repay debt.

SandRidge said it expects the Permian properties to increase its oil and natural gas liquids output to about 26 percent of total production in 2010, compared with 17 percent a year earlier.

The deal, which is expected to close on or before Dec. 31, involves properties in West Texas and New Mexico that are currently producing 46 million cubic feet equivalent per day (mmcfed) and had estimated proved reserves of 321 billion cubic feet equivalent.

To reflect the acquisition, SandRidge raised its 2010 production outlook to a range of 130 to 135 bcfe from 120 bcfe. It also forecast higher capital expenditures of $860 million, compared with $750 million it saw earlier.

About $720 million of the purchase price is for the reserves and $80 million is for undeveloped acreage, equipment and other assets, SandRidge said.

It will finance the acquisition with existing credit facility, $200 million from the sale of two million shares of mandatory convertible preferred stock and proceeds of a public offering of 22 million common shares.

Forest said it entered into agreements to sell non-operated assets in Alberta, Canada, for $38 million and will have divested about 50 percent of its non-core Canadian properties.

The company intends to sell its remaining non-core Canadian properties by early 2010.

During 2009, Forest expects to have closed on the sale of 68 mmcfed of production and 456 bcfe of estimated proved reserves for proceeds in excess of $1 billion, it added.

In August, the company had sold parts of its Permian assets for $118 million to an unnamed third party. [ID:nWNBB0869]

The latest announcement is part of Forest’s previously announced plan to sell $450 million to $750 million of non-core properties.

Shares of Forest Oil were up about 3 percent at $19.00 in trading after the bell, while SandRidge shares were down about 8 percent at $8.65.

For the alerts, please double click [ID:nWNAB0633] [ID:nWNAB0632] [ID:nWNAB0634] (Reporting by Arup Roychoudhury in Bangalore; Editing by Anil D’Silva) ((; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging:

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