Seagull to Buy $56.2 Million in Oil and Gas

Seagull Energy Corp. Monday announced that it has signed letters of intent to acquire oil and gas properties for a total cash purchase price of about $56.2 million.

Seagull and Tenneco Inc. have signed a letter of intent calling for Seagull to buy outstanding capital stock in Houston Oil & Minerals Corp. for $16.4 million.

Houston Oil & Minerals is an indirect, wholly owned subsidiary of Tenneco. The letter of intent calls for Tenneco and Seagull to complete a stock purchase agreement by Oct. 21, subject to approval by boards of both companies and the clearance of antitrust regulations.

Other Purchases

In related but separate transactions, Seagull also signed letters of intent to buy the assets and liabilities of Houston Oil Trust for $35.3 million and Houston Oil Royalty Trust for $4.5 million.

Both trusts own interests in the properties owned and managed by Houston Oil & Minerals.

The letters of intent with First City National Bank of Houston, trustee of each of the trusts, call for Seagull and the trustee to execute definitive asset purchase agreements by Thursday, subject to approval by the Seagull board.

First City then will submit the asset purchase agreements for approval by the holders of the 32.4 million units of HOT and 2.3 million units of HORT. A majority vote of the unit holders of each trust will be required to approve the asset sales.

Seagull’s definitive agreements with the trustee are subject to completion of its purchase of the Houston Oil & Minerals stock from Tenneco and certain other conditions. The parties expect to complete all of the transactions by the end of the year.

Houston Oil & Minerals, HOT and HORT own various interests in 45 oil and gas fields, with most of the reserves consisting of natural gas in onshore and offshore fields along the Texas Gulf Coast.

Gas, Oil Reserves

As of mid-1988, proved reserves applicable to the three entities were estimated to total 43.3 billion cubic feet of natural gas and 3.1 million barrels of crude oil.