Mobil Enters Into Definitive Agreement with Arco on Exchange of Domestic Upstream Assets.FAIRFAX, Va.--(BUSINESS WIRE)--Aug. 4, 1998-- Exit of Western Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east Increases Ownership in Aera Energy Mobil Corp. announced Tuesday its domestic exploration and production business unit, Mobil Exploration & Producing U.S. Inc. (MEPUS MEPUS Mobil Exploration & Producing United States ), and Atlantic Richfield Co. (ARCO ar·co adv. & adj. Music With a bow. Used chiefly as a direction to indicate the resumption of bowing after a pizzicato passage. Adj. 1. ), have reached a definitive agreement on an exchange of assets Exchange of assets Acquisition of another company by purchase of its assets in exchange for cash or stock. that would transfer Mobil's interests in certain shelf operations in the central and western Gulf of Mexico to Western Midway Co., a wholly-owned subsidiary of ARCO, in exchange for all of its onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. exploration and producing properties in California. Under terms of the agreement, ARCO would acquire Mobil's interests in the offshore producing and non-producing properties with related infrastructure primarily located in the western shelf region of the Gulf of Mexico. Total net production from the Mobil properties is approximately 40 thousand barrels of oil equivalent per day (TBDOE), with total reserves of about 80 million barrels of oil equivalent (MMBOE MMBOE Million Barrels of Oil Equivalent (energy and petroleum industry) ). In return, Mobil would receive ARCO's oil and gas assets in California located in the San Joaquin San Joaquin (săn wäkēn`), river, c.320 mi (510 km) long, rising in the Sierra Nevada, E Calif., and flowing W then N through the S Central Valley to form a large delta with the Sacramento River near Suisun Bay, an arm of San Francisco Bay. Basin. Mobil would also receive ARCO's 49 percent partnership interest in a 234-megawatt co-generation facility operated by San Joaquin Energy Co. at the Midway Sunset field. In addition, because the Mobil production is about two-thirds gas, Mobil and ARCO have negotiated a crude price protection agreement that guarantees Mobil a minimum "floor price" on the California crude volumes while allowing ARCO to retain crude realizations above a "ceiling price". The price protection agreement expires in December, 1999. Upon completion of the asset exchange, Mobil and Shell Oil Co. (Shell) will arrange to transfer the newly acquired California properties to Aera Energy LLC Aera Energy LLC (Aera) is the California-based joint venture of Shell Oil Company and Mobil Oil. Approximately 1,100 Aera employees are based in California. The company's head office is in Bakersfield, California. , a joint venture company between Mobil and Shell, and increase Mobil's equity interest in Aera from 41.4 percent to 48.2 percent. Mobil's share of Aera production is expected to increase by about 40 TBDOE to approximately 140 TBDOE, with reserves increasing by 150 MMBOE. Aera production is about 30 percent light oil and gas. "These transactions demonstrate Mobil's commitment to profitably maintaining our production in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. through growth in areas where the company has a competitive advantage," said Lou Allstadt, executive vice president, Mobil Corp. The transaction, which is subject to completion of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. and regulatory approvals, is anticipated to close around the end of October, 1998. Other than potential payments that may arise as a result of the price protection agreement, the transaction involves no exchange of cash. "This is a win/win situation for both companies and will significantly benefit Mobil and ARCO by adding to their individual areas of strength and allowing for significant cost savings through overhead reductions and operational efficiencies," said J. Michael Yeager, president and general manager of MEPUS. "Upon completion of this asset exchange, Mobil will be able to focus its Gulf of Mexico capital, technology and people resources to the Central Gulf, Deepwater and Mobile Bay regions. We are also very glad to be increasing our interest in Aera Energy and its long-lived reserve base."
CONTACT: Mobil
Len D'Eramo, Dallas, 214/951-2774
Dave Dickson, Fairfax, 703/846-2378
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