BP Amoco PLC has unveiled plans to build a new, unified global brand and update its 28,000 retail sites around the world over the next 4 years. The revamp comes 12 years after BP's sites were last modernized and 20 years after the refurbishment of Amoco's network.
BP Amoco-which consists of the former British Petroleum PLC, Amoco Corp., ARCO, and Burmah Castrol companies-is changing its name to simply BP. And the BP shield and Amoco torch logos are being replaced by a green, white, and yellow sunburst-design symbol that BP calls the Helios mark, after the sun god of ancient Greece.
"...The new logo is intended to exemplify dynamic energy in all its forms, including oil and gas to solar, that the company delivers to its 10 million daily customers around the world," said BP.
In other examples of companies reinventing themselves, in these cases via forays into new or expanded business lines:
- BP, also solidifying its stance as a major natural gas and power player, announced plans to purchase Boise, Idaho-based IGI Resources Inc. IGI, owned by Intermountain Industries Inc., is a natural gas and power trading and transportation company serving primarily industrial customers in the western US and Canada. IGI's gas sales total about 600 MMcfd. It also manages pipeline and storage capacity.
- Apache Corp., Houston, continued its metamorphosis into a superindependent via acquisition with plans to acquire for $385 million cash the Gulf of Mexico interests of a subsidiary of Occidental Petroleum Corp., Los Angeles.
- The board of Tulsa-based Williams, a pioneer in the intermarriage of energy and telecommunications businesses via sharing of facilities-pipelines and fiber optic cables-has authorized management to pursue a course of action that could lead to a complete separation of that company's energy and communications businesses.
- Not content with merely evolving from a Texas electric utility into a multistate integrated energy giant, and seeking to expand its presence in Europe, Dallas-based TXU Corp. increased its stake in Spanish energy company Hidroelectrica del Cantabrico to just under 20%.
- Belgian energy giant Tractebel has expanded its reach as global player in the LNG business by purchasing Cabot Corp. subsidiary Cabot Liquefied Natural Gas, Boston, for $680 million. The deal also vaults the company into the ranks of major players in the important New England gas market.
BP retail plans
BP aims to expand its worldwide retail business by more than 10%/year during the next 3 years. The new logo's appearance on retail pole-signs will be phased to coincide with the updating of the company's retail network.
The first new retail sites will open later this year in London, Cleveland, and Indianapolis, based on a "radical" prototype service station BP perfected over the last 3 months at a secret warehouse location in Atlanta.
"The new sites will offer customers proprietary cleaner-burning fuels, Castrol lubricants, and in-store 'e-kiosks,' where customers can check weather and traffic conditions, pay without cash or credit cards, and call up directions to local destinations," said BP. "While filling their tanks, customers can use a touch-screen monitor to order food, which will be waiting for them inside the store."
The e-kiosks will also offer sports scores and news headlines.
BP's new sites will be partly powered by solar energy.
BP says it will retain the value of its strong product brands, such as Castrol lubricants. All of its US retail sites east of the Rockies will continue to sell Amoco-branded fuel products. BP also will retain the ARCO brand and marketing strategy at its 1,800 retail outlets on the US West Coast.
BP-IGI
The former British Petroleum PLC's serial acquisitions of Amoco Corp. then ARCO constituted a major move into the natural gas arena for the previously oil-heavy major. This latest acquisition will become part of BP's North America gas and power business.
Tony Fountain, president of that business unit, says the purchase is a "significant move for our business because it expands our marketing presence in a growth region.
"IGI Resources has an excellent reputation for customer service," Fountain continued. "We intend to build upon that, while at the same time widening the range of products and expanding the supply base that IGI's customers can access."
IGI Resources' offices in Boise, Seattle, and Vancouver, Wash., will join the BP system.
The transaction is subject to regulatory approval and certain other terms and conditions.
Apache gulf purchase
Apache will acquire interests in 32 fields, half of them operated, on 93 blocks on the Gulf of Mexico's Outer Continental Shelf. Total proven reserves are 56.8 million boe. Included in the deal is proprietary 3D seismic data on 113 blocks covering 1,022 sq miles.
The acquisition expands Apache's presence on the OCS. Much of the acreage is near or adjacent to Apache's existing blocks and complements its existing 3D seismic data and operations. The new acreage includes Grand Isle 43, Matagorda 620 and 638, Brazos A-133, and Mobile A-23, which make up 65% of the total value of the deal's acreage and reserves, the company said.
Apache has identified 50 drilling locations and 150 behind-pipe recompletion opportunities.
"These are excellent assets with upside potential we can realize through the drill bit," said G. Steven Farris, president and COO of Apache.
So far this year, Apache has announced or completed cash acquisitions totaling $860 million. Its most recent acquisitions include the January purchase of western Oklahoma and Texas Panhandle assets from Crescendo Resources LP, Amarillo, Tex., and the June acquisition of South Texas and Permian basin assets for $320 million from Collins & Ware Inc., Midland, Tex. (OGJ Online, June 14, 2000).
These acquisitions have added reserves of 184 million boe at a cost of $4.67/ boe. They also add production of 190 MMcfd of gas and 14,000 b/d of liquids.
Apache estimates net production from the Oxy properties through the end of 2000 at an average 107 MMcfd of gas and 7,800 b/d of oil. It also estimates the proven reserves to have a 6-year life.
Expected to close Aug. 15, the Oxy acquisition will add immediately to Apache's per-share earnings and cash flow. Apache also said it plans to offer 7 million shares of common stock through underwriters to pay down short-term debt incurred with Apache's year 2000 acquisitions. The underwriters will be managed by Merrill Lynch & Co., Goldman Sachs & Co., Salomon Smith Barney Inc., and Credit Suisse First Boston.
Following announcement of the deal, Moody's Investors Service, New York, confirmed Apache's Baa1 senior unsecured debt rating and deemed the ratings outlook stable.
"Apache has a successful history of acquiring and exploiting properties that fit its areas of geological expertise, with debt reduction on a timely basis through equity transactions, property consolidations, and enhancement of production and cash flow," said Moody's. "Moody's ratings also incorporate the expectation that Apache will continue to benefit from competitive reinvestment economics for the acquisition, development, and production of oil and gas reserves."
Williams energy, telecomm units
Keith E. Bailey, Williams chairman, president, and CEO, said that, while no specific course of action has been determined, the process toward separation of the energy and telecomm units would take no more than 18 months.
He said any change from the current ownership structure would be contingent upon a number of factors, including ensuring favorable tax treatment for Williams's shareholders. Last October, Williams sold a portion of Williams Communications in public and private equity offerings. Williams retains ownership of about 85% of Williams Communications.
"We believe these steps are the best way to ensure that both our energy and communications businesses have the efficient and effective access to the capital necessary to pursue the substantial growth opportunities that each enjoys," Bailey said. He said the company would have no further comment on the issue for the time being.
Earlier this month, Williams Com- munications said it was considering plans to sell $700 million of senior notes in a private placement. The company said the proceeds from the sale of the securities would be used to continue the enhancement and expansion of the Williams Communications network and for working capital and general corporate purposes.
Energy telecom pioneer Williams first entered the telecommunications industry with WilTel and became the fourth largest carrier after AT&T, MCI, and Sprint before selling its system to LDDS Worldcom in 1995 for $2.5 billion. The company reentered the business as a long-haul carrier after its noncompete agreement with Worldcom expired.
Williams's rebirth as an energy-telecom hybrid took place after it bought Transco, a Houston-based energy and pipeline company, with the funds from the sale of WilTel.
Two years later, Williams began using Transco's right-of-way to build a fiber optic network between Houston and Washington, DC.
TXU-Hidro
TXU Europe already held about a 14% stake in Hidro. The additional stake is valued at about $136.5 million euros. TXU earlier launched a friendly takeover bid for all of Hidro, but the overture was rejected as insufficient by Hidro's board. TXU had offered 21.25 euros/share.
Simultaneously, Belgium's Electrabel, a unit of Suez Lyonnaise des Eaux, also purchased 10% of Hidroel
Spanish utility Union Fenosa came in with a bid of 24 euros/share, but government officials rejected that bid because a takeover by Union Fenosa would interfere with eventual competition in Spain, according to Carol Peters, spokeswoman for TXU Corp.
Meanwhile, TXU is still interested in eventually acquiring the entire company, but said that it would not launch another takeover bid. Instead, TXU is in discussions with the board and the Spanish government about what is best for the company and for the region, Peters says.
"We're all just sitting there looking at each other at the table," says Peters. "We're not out of the picture, though. We are still interested in the region and the company."
Hidro is the fourth largest integrated Spanish energy company, with assets in Asturias in northern Spain. The company has about 520,000 electricity customers and over 115,000 natural gas customers, with 1999 sales exceeding 7,600 gw-hr of electricity. It has over 2,100 Mw of installed electric generation capacity, with a power generation market share of about 7%.
TXU Europe is pursuing assets or firm contracts with power generators that give its trading and marketing operation in Europe access to firm power supplies on the continent. The investment in Hidro forms a part of TXU's overall European strategy.
TXU already has a huge stake in the UK with its investment in Eastern Energy, an electrical distribution and generation utility.
But recently, TXU has turned its attention to the European continent and is talking with European players or anybody interested in working a deal around its 7,000 Mw of generation in Britain. Because of regulatory difficulties in England and resulting lower prices for power than anticipated, ownership in generation in that country has not brought the returns expected. TXU is seeking a swap or possibly a sale of a portion of these assets.
"We have talked to Electric
Industry observers are carefully watching any activities with EdF because its host country France is one of the slowest countries to open its electricity markets to foreign private investment. There is a close race to see which foreign company gets a stake in that country first.
Tractebel-Cabot
Under the agreement, Tractebel will acquire Cabot's LNG terminal in Everett, Mass., Cabot's 10% interest in a liquefaction facility in Trinidad and Tobago, and Cabot's Matthew LNG tanker. It also includes a multibillion-dollar gas sales and purchase agreement with Sithe Energies Inc., under which a Cabot LNG subsidiary is the principal supplier of natural gas to fuel Sithe's Mystic station, a 1,600-Mw power plant under construction at Everett, Mass.
In the Boston gas market, Cabot is a major owner of storage capacity, a baseload gas supplier, and gas peak-shaver. Hansen said Tractebel and its affiliate, Distrigas (also of Belgium), will bring extensive technical, economic, and marketing experience to the area's LNG market.
The acquisition represents Tractebel's initial entry into the North American upstream market and is a "wonderful addition" to the company's existing businesses, says Bill Utt, president of Tractebel Power Inc. & Tractebel Marketing Inc., Houston.
Tractebel, a global energy and services company, operates 20 US power plants in 12 states, including in New Hampshire and Pennsylvania.
Tractebel CEO Jean-Pierre Hansen said the acquisition of Cabot LNG provides a 20% share of the Atlantic Basin LNG market and will create a foothold in the gas markets in the Northeast, allowing Tractebel to serve the power industry there.
It also provides an ideal complement to TEMI, Tractebel's North American energy trading arm, he said. TEMI is already active in the market, particularly in the Boston region.
"In the present market circumstances, this acquisition will contribute positively to Tractebel's results from the outset," Hanson said. "The integration of Cabot LNG will create synergies with existing LNG and natural gas operations within our group."
The transaction is expected to close in late August 2000.
Cabot also reported it made the first delivery of LNG to Puerto Rico's first independent power plant and LNG receiving terminal, the EcoEl
The complex includes the power plant, a state-of-the-art LNG import terminal with 3.6 bcf of storage, and a desalination plant.
The group has electricity generating capacity of about 46,000 Mw-either already installed or at an advanced state of development-of which 30,000 Mw is outside Belgium. One of Europe's five largest power producers, it also operates gas transport networks in Europe, Latin America, and Asia.
