Tesoro to sell Bolivian E&P operations to BG International

Nov 22, 1999 01:00 AM

Tesoro Petroleum Corporation has entered into a definitive agreement to sell its Bolivian-based Exploration & Production (E&P) business to BG International Ltd., a subsidiary of BG plc, for a gross sales price of $ 100 mm. Under the terms of the agreement, the transaction will be structured as a stock purchase and is scheduled to close by Dec. 31, 1999. The sales price will be adjusted for transaction costs and certain purchase price adjustments for business activity occurring between July 1, 1999, and closing. Net after-tax cash proceeds are estimated to be $ 95 mm.
Credit Suisse First Boston served as Tesoro's financial advisors for this transaction. The business being sold includes five shared-risk contracts with an agency of the Bolivian government to explore for and produce hydrocarbons on more than 1 mm gross acres in two producing blocks and three non-producing blocks.

In addition, Tesoro sells natural gas to the Brazilian market under terms of a 20-year, take-or-pay contract between an agency of the Bolivian government and Petroleo Brasileiro, S.A. Tesoro's production capacity significantly exceeds its obligation under this contract. During the first nine months of 1999, cash flow for Tesoro's operations in Latin America, as measured by EBITDA, was $ 2.7 mm from average production of 19.1 mm cfpd equivalent of natural gas and condensate.
"With the agreements to sell our domestic and Bolivian E&P operations, Tesoro can now focus exclusively on its downstream operations. We plan to use the proceeds from these transactions to achieve a strong financial position with a low debt-to-capital ratio in order to be well positioned to act on significant downstream opportunities that we believe will become available in the near term," stated Bruce A. Smith, chairman, president and CEO of Tesoro.

Tesoro Petroleum Corporation is a natural resource company engaged in petroleum refining, distribution and marketing of petroleum products, providing marine logistics services, and the exploration andproduction of natural gas and crude oil.

Source: Business Wire
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