Finance/Companies news briefs, June 28
Precision Drilling � Plains Energy Services � UTI Energy � Atofina Chemicals � Atofina Petrochemicals � Occidental Petroleum ... ExxonMobil � Valero Energy Corp. ... PanCanadian Petroleum Ltd. ... FirstEnergy Capital � Cabre Exploration � CanFund VE Investors
Precision Drilling Corp., Calgary, has made a successful takeover bid for Plains Energy Services Ltd., which specializes in coiled tubing drilling. Precision, Canada�s largest drilling company, offered about $11.75 (Can.)/share for Plains. The value of the deal is about $317 million (Can.) including cash, stock, and assumed debt. The Plains board has unanimously approved the deal. An earlier bid of $250 million (Can) by Precision was rejected by Plains. The new offer, deemed "friendly," is about 26% higher than the original unsolicited bid. Precision operates 208 rigs and 76 service rigs in Canada. Plains has a fleet of seven coiled tubing rigs for shallow well drilling and contracts to drill 1,200 wells this year. UTI Energy Corp., Houston, was widely reported to be interested in Plains, a factor in Precision�s decision to increase its offer.
Elf Atochem North America has changed its name to Atofina Chemicals Inc., and Fina Oil & Chemical Co. has become Atofina Petrochemicals Inc. The name changes follow the merger of TotalFina SA and Elf Aquitaine. Atofina Chemicals, which employs 4,000 people, will keep its headquarters in Philadelphia. Atofina Petrochemicals, which employs 2,000 people, will move its headquarters from Dallas to Houston.
Occidental Petroleum Corp., Los Angeles, said June 16 that it is exploring options to sell or otherwise exit several of its chemical intermediate businesses, including its Niagara Falls chemical intermediate facility. These businesses have combined annual sales of approximately $430 million. The sales process is expected to be completed by yearend. This will continue Occidental's program of focusing its chemical division on its core chlor-alkali and vinyls businesses. OxyChem's performance chemicals businesses�including silicates and pool and chrome chemicals�will not be affected by this strategic decision, says Occidental. The sales are part of Occidental's previously announced debt-reduction program.
ExxonMobil Corp. on Tuesday announced it has completed the divestment of Exxon refining and marketing assets and operations in California. The divestments were required by the US Federal Trade Commission's consent agreement and the consent decree entered with the State of California to allow Exxon Corp. and Mobil Corp. to merge. As a result, Mobil's Torrance, Calif., refinery and California pipelines, as well as the Mobil fuels marketing and supply operations in California, Arizona, and Nevada, will be released from a separately held business and fully integrated with ExxonMobil. In order to satisfy the consent agreement requirements, Exxon's 130,000 b/d Benicia, Calif., refinery and fuels terminal, as well as Exxon's interest in about 340 service stations, were sold to Valero Energy Corp.
Directors of PanCanadian Petroleum Ltd. have approved a $370 million increase in capital spending in 2000, bringing spending this year to a total of about $1.3 billion, excluding acquisitions. Most of the added investment will go to further natural gas development in Western Canada, build two recently announced natural gas-fired generation plants near Calgary, and fund additional appraisal and exploration expenditures off Nova Scotia.
Canada�s oil and gas industry will generate at least $7 billion (Can.) in profits in 2000 and is enjoying unprecedented levels of cash flow, says an investment report. A report by FirstEnergy Capital Corp., Calgary, says if activity continues at current levels, earnings could reach $10 billion this year. That compares with industry losses of $1.6 billion when oil prices fell through the floor in 1998 to $11 bbl. The study is based on financial performance of 80 large, publicly traded producers. It says high oil and gas prices are driving the industry activity and cash flow. Martin Molyneaux of FirstEnergy said the industry is enjoying an explosion of earnings, cash flow, and return on equity.
Cabre Exploration Ltd., Calgary, has announced it is for sale and will open a data room in mid-July with bidding to end in September. The company had 1999 production of 10,000 b/d of oil and more than 60 MMcfd of natural gas. CEO Doug Kay said company shares are not trading at a level the board thinks they should be. CanFund VE Investors LP, an investor group, bought an 8.1% position in Cabre in April, touching off rumors that the company could be for sale.