By the OGJ Online Staff
HOUSTON, July 10 -- Amerada Hess Corp., New York City, said Tuesday it would acquire Triton Energy Ltd., Dallas, for $3.2 billion, including the assumption of $500 million of Triton debt.
Amerada will pay $45/share for Triton stock, a premium of 50% to the closing price of Triton shares on Monday and 88% of Triton's 52-week high. The transaction is expected to close in the third quarter.
The boards of both companies have approved the transaction.
Amerada said it had an irrevocable commitment to buy Hicks, Muse, Tate & Furst Inc.'s 38% ownership stake in Triton.
John Hess, Amerada Hess chairman and CEO, said, "The acquisition of Triton strengthens our exploration and production business, gives us access to long-life international reserves, substantially increases our production growth and provides significant exploration potential. It improves our competitive position in a consolidating industry while being accretive to our estimates of earnings and cash flow per share for 2002."
He said the acquisition will increase Amerada's production from 425,000 boe/d to 535,000 boe/d in 2002 and more than 600,000 boe/d in 2003.
He said the deal "makes Amerada Hess one of the largest global independent exploration and production companies with the scale to access a broader range of investment opportunities that meet our financial goals."
Amerada Hess is active in oil and gas exploration and production, transportation, and refining. It mostly operates in the US, UK, Norway, Denmark, Brazil, Algeria, Gabon, Indonesia, Azerbaijan, Thailand, and Malaysia.
Amerada Hess' reserves on Dec. 31 were more than 1.1 boe.
Triton is an exploration and production company with assets in West Africa, Latin America, and Southeast Asia. At Dec. 31, Triton's reserves were 293.5 million boe.
John B. Parry, an analyst for John S. Herold Inc., said the deal brings Amerada Hess, an integrated oil company, the increased exploration prospects that it had been seeking.
"Hess was following a flat production profile. They were trying to expand internationally. This deal really puts them on the map compared to where they had been previously. It's ironic that a little company like Triton can do that for Hess," Parry said.
Triton's holdings in Colombia, West Africa, and the Malaysia-Thailand Joint Development Area especially were attractive to Hess, Parry said. He called Triton "a unique independent" known for its finding major fields internationally.
Meanwhile, Triton shareholders will benefit from Amerada Hess's "deep financial pockets," Parry said. "The prospects will be able to proceed faster. Triton shareholders are going to have a lot fewer financial headaches."
Three years ago, Triton restructured to cut capital spending and improve cash flow. As a result, Triton took a $72 million charge for withdrawal from exploration projects (OGJ, July 27, 1998, p. 36).
Steve Enger, analyst for Petrie Parkman & Co., agreed the key behind the deal was growth potential in both production and reserves for Amerada Hess.
Triton's prospects off Equatorial Guinea hold the promise of "being a home run," Enger said.
Triton operates the 1 million-acre Block G with 85% interest. Last month, Triton made another discovery on Block G that found reservoirs similar to those of Ceiba field (OGJ Online, June 4, 2001).