SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 13, 1998
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS.
On February 13, 1998 the following news release was issued:
Unocal Canada to exchange oil and gas assets
for Tarragon common stock and debentures
El Segundo, Calif., Feb. 13, 1998 - Unocal Corporation said today that
its Unocal Canada Limited subsidiary has reached agreement to exchange certain
of its Canadian oil and gas assets with Tarragon Oil and Gas Limited for
approximately $215 million (C$309 million) in Tarragon common stock and
debentures.
Under the agreement, Unocal Canada would receive 21 million shares of
Tarragon common stock and $70 million (C$100 million) in Tarragon subordinated
debentures with a floating coupon rate of 150 basis points over the three-year
Government of Canada Treasury bond rate (fixed quarterly). The common share
position would give Unocal Canada a 28.7-percent ownership in Tarragon.
The agreement also gives Unocal representation on Tarragon's board of
directors and the option to participate in Tarragon's future equity offerings.
"Tarragon is a strong growth company with a record of low operating and
finding and developing costs," said Charles R. Williamson, Unocal group vice
president for International Operations. "Joining with an aggressive company like
Tarragon will enable us to realize the full value of these Canadian assets for
our stockholders and participate in the growth potential of Tarragon's other
operations, while allowing our management team to focus on Unocal's strategic,
long-term oil and gas growth opportunities."
Williamson added that the exchange is accretive to Unocal's reserves
and production. "We also expect to see Tarragon's aggressive approach increase
reserves and production in the future."
Unocal Canada will transfer all of its producing oil and gas assets in
Alberta, essentially all of its producing assets in British Columbia,
substantially all of its undeveloped lands in
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Alberta and certain of its undeveloped lands in British Columbia to Tarragon.
These assets include proved reserves of approximately 31 million barrels of
oil equivalent (boe), 348,000 net acres of undeveloped land, 35,000 miles
(57,000 kilometers) of 2-D seismic data, and 1,200 square miles (3,000 square
kilometers) of proprietary 3-D seismic data. The undeveloped land being
transferred to Tarragon is comprised of 330,000 net acres in Alberta (78%
average working interest) and 35,000 net acres in British Columbia (74% average
working interest).
Net production from the Unocal Canada properties currently averages
about 12,700 boe per day. The Unocal Canada reserves and production data are
reported on a U.S. basis after royalties, with natural gas converted at a 6:1
ratio.
Unocal Canada will retain its interests in the Alliance Pipeline
project, the Aitken Creek Gas Storage Project in British Columbia, the Cal Ven
Pipeline, interests in the Northwest Territories and oil and gas producing
properties located in Southwest Saskatchewan. Net production from Southwest
Saskatchewan is about 6,200 boe per day. Unocal Canada is currently in
discussions with certain parties regarding the non-operated Southwest
Saskatchewan assets.
Unocal Canada has approximately 100 employees. Under the terms of the
agreement, Tarragon will be offering employment opportunities to the Unocal
Canada employees who are necessary to operate the assets, as well as those
employees that have the skills and necessary experience to benefit the
expanded Tarragon organization.
The transaction, which is expected to close early in the second quarter
1998, is subject to customary Canadian regulatory approvals as well as the
approval of the Tarragon stockholders.
CIBC Wood Gundy Securities Inc. advised Unocal in respect to this
transaction.
Unocal is a leading global energy resource and project development company,
with major oil and gas exploration and production activities in Asia, the U.S.
Gulf of Mexico, and Latin America. The company maintains twin headquarters in
California and Malaysia, and has major offices in Singapore, Jakarta, Bangkok,
Sugar Land, Texas, and Lafayette, Louisiana.
Forward-looking statements, including estimates of future business
arrangements and operating forecasts in this news release are based on
assumptions concerning market, competitive, regulatory, environmental,
operational and other considerations. Actual results could differ materially.
For more information about Unocal and its activities, visit Unocal's
website at www.unocal.com.
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UNOCAL CANADA LIMITED/
TARRAGON OIL AND GAS LIMITED
ASSET EXCHANGE FACT SHEET
U.S. dollar amounts are converted at the 2/12/98 foreign currency exchange rate;
market prices quoted at close of trading on Toronto Stock Exchange on 2/12/98
Production and reserve data are stated in accordance with accepted U.S.
reporting practices
VALUE OF TRANSACTION Approximately $215 million (C$309 million):
21 million shares of Tarragon Oil & Gas
Limited - market value~$6.92 (C$9.95)/share
$70 million (C$100 million) in senior
subordinated debentures with a floating
coupon rate (current rate: 6.732%)
UNOCAL CANADA ASSETS CONTRIBUTED Producing properties: Slave, Red Earth and
Sturgeon fields in northern Alberta; Kakwa,
Kaybob and Virginia Hills in west-central
Alberta; and Fireweed in northeast British
Columbia
348,000 net acres undeveloped land
35,000 miles of 2-D seismic data
1,200 square miles of proprietary 3-D
seismic
UNOCAL CANADA ASSET OPERATING DATA (1997)
Proved reserves (12/31/97) 31 million boe: 15.9 mmbbl oil & NGL, 91.4
bcf gas
NET PRODUCTION 12,700 boe/d: 7,900 bbl oil & NGL/d,
29 mmcf gas/d
UNOCAL'S PRO FORMA 28.7% INTEREST IN TARRAGON
PROVED RESERVES 57.9 million boe: 28 million bbl oil & NGL,
182 bcf gas
PRODUCTION 17,100 boe/d: 8,300 bbl oil & NGL/d,
53 mmcf gas/d
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNOCAL CORPORATION
(Registrant)
Date: February 13, 1998 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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