El Paso to buy Velvet Exploration

El Paso Corp., Houston, has agreed to buy Canadian E&P company Velvet Exploration Ltd. in a $280 million (US) transaction. In 2000, Velvet produced 8,195 boe/d, based on a 6:1 ratio.


By the OGJ Online Staff

HOUSTON, June 14 -- El Paso Corp., Houston, has agreed to buy Canadian E&P company Velvet Exploration Ltd. in a $280 million (US) transaction.

In 2000, Velvet produced 8,195 boe/d, based on a 6:1 ratio.

El Paso will offer shareholders $8.15 (Can.)/share in cash and assume debt of $52 million (US).

Velvet's directors have agreed to tender their shares and to recommend that shareholders accept the offer.

At least two-thirds of the shares must be tendered for the offer to be valid. Velvet has agreed to pay a termination fee of $15 million (Can.) under certain circumstances.

Yorkton Securities Inc. and BMO Nesbitt Burns Inc. acted as financial advisors to Velvet; Lehman Brothers advised El Paso.

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