By OGJ editors
HOUSTON, Feb. 13 -- Plains Exploration & Production Co. agreed to acquire Houston rival Nuevo Energy Co. in a stock transaction valued at $945 million.
Upon closing, Nuevo stockholders will own 47% and Plains Exploration stockholders will own 53% of the combined company.
The acquisition will increase the scale of Plains Exploration largest operating area, California. Pro forma proved develop reserves are expected to increase to 489 million boe of which 83% is oil and 71% is proved developed.
The New York-based Standard & Poor's Ratings Services its "BB-" ratings on Plains Exploration and Nuevo on creditwatch with positive implications.
The transaction is expected to qualify as a tax-free reorganization. The boards of both companies have approved the merger agreement and each has recommended it to their respective stockholders for approval.
Plains Exploration plans to issue up to 37.4 million shares to Nuevo shareholders and to assume $234 million of net debt (as of Dec. 31, 2003) and $115 million of trust convertible preferred securities.
Transaction terms call for Nuevo stockholders to receive 1.765 shares of Plains Exploration common stock for each share of Nuevo common stock, based on the Feb. 11 closing price of $15.89/share for Plains Exploration, which equates to $28.05/share for Nuevo stock.