Pioneer, Evergreen to merge in $2.1 billion deal

Pioneer Natural Resources Co., Dallas, and Evergreen Resources Inc., Denver, said their boards have approved a $2.1 billion merger in which Evergreen will become a subsidiary of Pioneer.

May 6, 2004

2 min read

By OGJ editors
HOUSTON, May 6 -- Pioneer Natural Resources Co., Dallas, and Evergreen Resources Inc., Denver, said their boards have approved a $2.1 billion merger in which Evergreen will become a subsidiary of Pioneer.

The merger, subject to Evergreen and Pioneer stockholder approval, is expected to be completed in the second half. Pioneer plans to retain Evergreen's offices as its Rocky Mountain operational base.

Terms call for Evergreen shareholders to receive $39/share in cash, Pioneer stock, or a combination of the two, the companies said. Evergreen shareholders are to receive 1.1635 share of Pioneer for each Evergreen share.

"Evergreen's long-lived natural gas reserves are a perfect fit with our vision to expand our premier asset foundation in North America to further anchor our growing exploration and international portfolio," said Pioneer Chairman and CEO Scott D. Sheffield.

The addition of Evergreen's reserves will increase Pioneer's proved reserves by 33%. The company is a leading developer of US coalbed methane reserves.

As of Dec. 31, 2003, Evergreen held 1.495 tcfe in proved reserves. Of those, 94% are in the Raton basin, 4% in Piceance/Uintah, and 2% in southern Canada. The acquisition cost for current proved reserves is estimated to be $1.40/Mcfe.

Evergreen currently produces 150 MMcfe/d and expects to average 160 MMcfe/d for the year. Production from Evergreen's assets is expected to double by 2008.

Standard & Poor's Ratings Services, New York, affirmed its 'BBB-' corporate credit rating on Pioneer and revised its outlook on the company to negative from stable. S&P placed its 'BB+' corporate credit rating for Evergreen on CreditWatch with positive implications.

"The negative outlook on Pioneer reflects that a downgrade is possible if the company fails to complete the $600 million debt reduction plan that its management outlined to Standard & Poor's," said S&P credit analyst Bruce Schwartz.