Alberta Energy Company Sells Forest Products Division for $385 Million

Strategic Insights -

Alberta Energy Company (AEC), a prominent oil and gas player, has announced the sale of its forest products division to West Fraser Timber Co. Ltd. for approximately $385 million. The sale marks the final step in AEC's strategic plan to focus on the oil and gas industry, aiming to transform the company into a high-performance player in the sector. The net proceeds from the sale will be used to retire debt, enhancing AEC's already strong financial position, and enable the company to direct its energies towards growing its core business.

Key Takeaways:

  • AEC has agreed to sell its forest products division to West Fraser Timber Co. Ltd. for approximately $385 million.
  • The sale will result in approximately $300 million in net proceeds for AEC after fees, disbursements, and other adjustments.
  • Employment of existing employees in AEC's forest products business will be continued by the buyer.
  • The sale is subject to regulatory approvals and is expected to close on July 31, 1995.
  • AEC's President and CEO, Gwyn Morgan, stated that the sale marks the completion of the company's strategic plan to focus on the oil and gas industry.
  • The Company's oil and gas business is expected to benefit from the sale, with plans to increase reserves, record oil production, and ensure gas deliverability to respond to market changes.
  • AEC's exploration and production (E&P) debt-to-cash flow ratio is expected to improve to 0.7 times, and the debt-to-equity ratio to 10:90.
  • The Company forecasts 10% growth in average daily oil and NGLs production to 40,600 barrels in 1995.
  • Daily natural gas sales are expected to jump 20% to 400 million cubic feet per day when markets improve.

Statistics:

  • Total proceeds from the sale: approximately $385 million
  • Net proceeds to AEC: approximately $300 million
  • Average daily oil and NGLs production growth: 10%
  • Forecasted average daily oil and NGLs production in 1995: 40,600 barrels
  • Forecasted daily natural gas sales growth: 20%
  • Forecasted daily natural gas sales: 400 million cubic feet per day

Sources:

  • Alberta Energy Company press release (June 18, 1995)
  • Business Wire (June 18, 1995)