Burlington Resources acquires Poco Petroleums

Aug 17, 1999 02:00 AM

Burlington Resources has agreed to buy Canada's Poco Petroleums Ltd. for $ 1.75 bn in stock, making Houston-based Burlington the fourth-largest natural gas producer in North America.
Under the agreement announced, Poco shareholders will receive.25 Burlington share for each share of Poco held, or a one-for-four exchange. Based on Burlington Resources' closing stock price of $ 45.31 1/4, the deal values each Poco share at $ 11.33. That represents a 25 premium over Poco's closing price of $ 9.03 (C $ 13.40) before it was halted on the Toronto Stock Exchange.
Burlington also will assume $ 750 mm in Poco debt. Poco's 300 employees will be retained and added to Burlington Resources' staff of 1,750, officials said.

The deal marks Burlington Resources' entry into the Canadian market and further strengthens its position as the dominant independent exploration and production company in the U.S. market, President Bobby S. Shackouls said.
"BR, with Poco as its partner in Canada, will be betterpositioned than at any time in its history to continue the implementation of our aggressive, global, value-oriented capital program," he said. "In short, Poco is an ideal company to be BR's growth platform in Canada, and to build value for the shareholders of the combined enterprise."
John Ferguson, Poco's vice president and CFO, said merger talks had been under way for about three months. He said the two companies are comparable in their aggressiveness and the youth of their staffs.
"We're a very large producer of natural gas in Canada, and they're a very large producer of natural gas in the U.S., but they don't have anything in Canada so it's a good fit. The cultures are very similar." The deal, which is expected to close by the end of the year, has been approved by directors of both companies but is subject to shareholder and regulatory approval.

The combined company will rank behind only Exxon, BP Amoco and Shell in North American natural gas production. The two companies had a combined totalof 9.9 tcf in world-wide reserves as of Dec. 31. Combined 1998 world-wide gas production was 2.1 bn cfpd; oil production was approximately 106,000 bpd.

Source: AP
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