Conoco Inc. and Phillips Petroleum Co. have determined the locations of most major staff and support functions for the newly formed ConocoPhillips. As a result, the combined firm expects to lay off some workers in Houston, Tempe, Ariz., and Ponca City, Okla. Employees will be spared in Phillips's Bartlesville, Okla, headquarters, however.
In other company acquisitions news:
- Tesoro Petroleum Corp. again amended terms for its purchase of Valero Energy Corp.'s 168,000 b/d Golden Eagle refinery and 70 related retail sites in northern California. Tesoro will pay a total of $1.075 billion and delay the payment of $150 million of the acquisition price by issuing two 10-year notes.
- ExxonMobil Corp. said it will divest itself of all its affiliated companies that hold interests in its copper mining business unit Cia. Minera Disputada de las Condes Ltda. and will sell them to Anglo American PLC for $1.3 billion.
- Plains All American Pipeline LP, Houston, reached a definitive agreement to acquire certain crude oil pipeline assets from Shell Pipeline Co. LP for $315 million.
- Danish state oil firm DONG AS will acquire Statoil ASA's assets in the Danish North Sea for 1 billion Danish kroner ($120 million). The sale will be effective July 1, subject to approval by the Danish competition commission.
ConocoPhillips restructuring
In Houston, Phillips has 1,500 employees, while Conoco has 2,100. Phillips has 1,500 workers in Tempe and 2,400 in Bartlesville, and there are 2,000 Conoco employees in Ponca City. Neither company would speculate as to how extensive the staff cuts would be nor when the reductions would occur.
Once the merger is finalized, which is expected during the second half of this year after receiving Federal Trade Commission approval, the company's headquarters will be in Houston, as reported when the merger was announced late last year (OGJ, Nov. 26, 2001, p. 26). The Houston base will support worldwide upstream operations, including Lower 48 headquarters and upstream technology. Downstream refining and wholesale marketing, marine, and the carbon, lubes, and specialties businesses also will be based in Houston, as will the company's commercial center, which will include crude oil supply and trading, refined products, natural gas liquids, and natural gas and power.
Phillips's Bartlesville headquarters will become home to the firm's global information technology center, global financial services, and human resources support teams. In addition, research and development activities currently performed in Bartlesville will remain there. Chevron Phillips Chemical Co. also plans to retain the current technology activities performed in Bartlesville, the company said.
ConocoPhillips will retain certain existing functions in Ponca City, including the operation of its Ponca City refinery as well as research and development activities. These activities include the development of the firm's carbon fibers and gas-to-liquids businesses.
ConocoPhillips will call Tempe home to its retail marketing organization and associated support services. There will be a transition period for the commercial group to consolidate activities in Houston, the company said. Presently, Tempe serves as the site of Phillips's wholesale and retail marketing organizations and its commercial group.
Eagle refinery acquisition
Earlier this year, San Antonio-based Tesoro announced amended terms for the refinery purchase, saying it would pay a total of $1.25 billion (OGJ, Mar. 4, 2002, p. 30). Originally, Tesoro agreed to buy the plant for $945 million, plus the value of feedstock and refined product inventory at closing, estimated at $130 million (OGJ, Feb. 11, 2002, p. 36).
In addition, Valero has agreed to expend through closing $47.5 million of the $122 million CARB (California Air Resources Board fuel standards) Phase III project at the refinery. Previously, Valero had estimated its total capital investment for this project at $22 million.
"The revised terms of the transaction reflect the current margin environment and our principal goal to preserve maximum financial flexibility and meet the pro forma capital requirements of the company...in a below-average margin environment," said Bruce Smith, chairman, president and CEO of Tesoro.
"Obviously, we were disappointed that the transaction did not go through as originally outlined," said Valero Chairman and CEO Bill Greehey, "but the revised terms of the transaction are still very favorable for all parties, and an expedited close is also in the best interest of all parties."
Valero's divestiture of the Golden Eagle plant and other retail assets was mandated by the consent order executed last year between the company and the FTC and by comparable orders executed with California and Oregon as a condition of Valero's completed merger with Ultramar Diamond Shamrock Corp., San Antonio (OGJ Online, Jan. 2, 2002).
The deal, which has met the approval of California's attorney general, is expected to close May 17. The FTC is reviewing the transaction's terms.
Anglo American deal
Anglo American also will pay future contingent payments in the event of higher future copper prices, ExxonMobil said.
Assumed assets include Los Bronces and El Soldado copper mines and the Chagres smelter, all in central Chile.
Last August, ExxonMobil said it would provide information to companies that had expressed interest in acquiring Disputada.
A definitive sale and purchase agreement should be signed by the firms within a month, ExxonMobil said, and the transaction is expected to be completed by June 30.
Plains All American purchase
Under terms of the transaction, which is expected to close within 90 days, Plains will acquire 100% of Shell's outstanding partnership interests in the Basin and Rancho pipeline systems as well as the Permian basin gathering system, its associated facilities, and other small gathering assets.
The Basin system, in particular, will provide Plains with a direct trunk line to Cushing, Okla., where the partnership owns crude oil storage capacity, said Greg Armstrong, Plains chairman and CEO. Plains will fund the transaction using existing availability under its revolving credit facility, the company said.
DONG's field acquisitions
Included in the sale are Statoil's 40% interest in Siri and Stine fields and its 18.8% interest in Lulita field. Statoil's share of the average production for 2002 from the fields being sold is 7,000 b/d of oil.
Oil production began from Statoil's Siri platform on Mar. 1, 1999. The production platform was installed in late 1998. The field, which lies in 60 m of water, is on Block 5604/20 on the Ringk bing-Fyn high about 130 miles west of Esbjerg, Denmark. Other Siri licensees are Enterprise Oil Ltd. 20%, DONG E&P 20%, Phillips Petroleum Co. 12.5%, and Denerco Oil AS 7.5%.
Lulita field came on stream in early June 1998 and was developed by the Danish Underground Consortium (DUC) and Danop-Statoil group, which comprises Statoil, DONG, Denerco Oil, and LD Energi. DUC holds 50% interest, LD Energi 5.5%, DONG E&P 13.6%, and Denerco 12.1%.