Tulsa-based Vintage Petroleum Inc. has entered into a merger agreement to be acquired by Occidental Petroleum Corp. for $20 per Vintage share, plus 0.42 of an Occidental share for each Vintage share. The total purchase price for Vintage’s approximately 68.3 million shares on a fully diluted basis, including debt assumption net of cash, is around $3.8 billion.
As part of this transaction, Occidental said it plans to implement a stock repurchase program for nine million Oxy shares in the open market or otherwise, from time-to-time, subject to market conditions and retention of the company’s credit rating.
“Vintage Petroleum is an excellent strategic fit for Oxy, adding to our core areas in California, the Middle East, and Latin America,” said Dr. Ray R. Irani, chairman, president, and CEO of Occidental. On a per-share basis, we expect the acquisition to be immediately accretive to cash flow, free cash flow, and earnings.”
At the end of 2004, Vintage had proved reserves of 437 million boe, 50 percent of which were located in Argentina and 32 percent in the US. In addition, the company has an estimated 421 million boe of probable and possible reserves.
“Vintage’s mix of domestic and international assets is complementary to Occidental’s existing portfolio of domestic and international opportunities and enhances the competitive ability of the combined company,” said Charles C. Stephen Jr., Vintage’s chairman and CEO. “In addition, the structure of this transaction allows Vintage shareholders to realize immediate and potentially continuing value through the blend of cash and stock.”
Occidental has said it is interested in divesting non-strategic Vintage assets in East Texas, along the Gulf Coast, and in the Mid-Continent region. These assets accounted for about 19,000 boe of Vintage’s production in the second quarter.
The transaction is expected to close in the first quarter of 2006, subject to approval by Vintage’s shareholders, regulatory approvals, and satisfaction of other customary conditions prior to completion.
Credit Suisse First Boston LLC and Lehman Brothers Inc. were financial advisors and provided fairness opinions to Vintage’s board of directors. Goldman Sachs & Co. and Petrie Parkman & Co. provided fairness opinions to Oxy’s board of directors. OGFJ
