YPF SA, Buenos Aires, is setting a cornerstone for international growth with a multimillion offer to acquire a large U.S. independent oil and gas company.
The deal could amount to as much as $742 million.
The Argentine oil company, formerly state owned, last week agreed to pay $5.50/share in a tender for the outstanding common stock of Maxus Energy Corp., Dallas.
Maxus has about 135 million shares of common stock outstanding. Holders of Maxus common stock also would receive a cash payment of 10/share upon redemption of rights issued under Maxus' shareholder rights plan.
The company's preferred stock is to remain outstanding.
Chase Manhattan Bank agreed to provide financing of as much as $800 million for the purchase.
YPFs offer and the proposed merger have been accepted by members of the Maxus board of directors. Final approval hinges on agreement by 51% of Maxus voting stock and satisfaction of certain financial conditions.
If all conditions are met, the Maxus merger into YPF will create a company with combined assets valued at more than $9 billion. Combined reserves of the companies at yearend 1993 amounted to more than 1.3 billion bbl of liquids and 10 tcf of gas. YPF worldwide in 1993 produced 115.4 million bbl of oil and 448.5 bcf of gas and Maxus 27.9 million bbl and 81 bcf of gas.
PRIVATIZATION CORNERSTONE
Earlier this year at a Cambridge Energy Research Associates conference in Houston, YPF Chief Executive Officer (CEO) Jose A. Estenssoro outlined a $27 billion capital spending plan for oil and gas development in Argentina through 2004. Most of the investment is to go for upstream activity, including $6 billion for exploration and $14 billion for development and production.
YPF is to contribute more than $15 billion of the projected spending.
If such spending occurs, Argentina's nationwide oil production could surpass 1 million b/d by the end of the century, with gas production reaching 4.9 bcfd by 2004.
Estenssoro last week said assets to be acquired in the deal with Maxus will enhance YPF's efforts to establish itself as a major international oil and gas company. That goal has been a focus of YPF's strategy since it completed privatization in 1993.
Estenssoro said YPF can help add value to Maxus' South American operations. The U.S. independent's 1993 yearend assets in South America included:
- 53.4 million bbl of net oil reserves in Ecuador, where Maxus is operator with a 35% interest in Block 16, a 511,000 acre tract in the Oriente basin, 160 miles southeast of Quito.
- 17.3 million bbl of oil reserves in Bolivia, where Maxus is operator with a 100% interest in the Mamore block, about 125 miles northwest of Santa Cruz.
Also in South America, Maxus holds a 95% interest in an operations services agreement supporting a reactivation contract Maxus and a partner signed in October 1993 for the Quiriquire unit, near Maturin in Northeast Venezuela.
OTHER MAXUS ASSETS
Elsewhere, Maxus is operator with a 56% interest in the Southeast Sumatra block, a 3 million acre tract off Indonesia, where production in 1993 averaged 148,000 b/d and net reserves to Maxus amounted to 120.5 million bbl at yearend 1993.
Also in Indonesia, Maxus also holds a 24% interest in the Northwest Java offshore tract, where yearend 1993 oil production exceeded 120,000 b/d of oil from net reserves of 59.6 million bbl. Maxus' net gas production on the tract in 1993 averaged 22-24 MMcfd, with net reserves of 262 bcf at yearend.
In the U.S., Maxus at yearend 1993 had net oil reserves of 12.3 million bbl, including 8.6 million bbl in the Gulf Coast region and 3.7 million bbl in the Midcontinent. Net gas reserves in the U.S. included 506 bcf in the Midcontinent and 174 bcf on the Gulf Coast.
Meantime, Maxus in 1993 produced about 1.8 million bbl of oil in the U.S., including 1.4 million bbl on the Gulf Coast and 400,000 bbl in the Midcontinent. U.S. gas production in 1993 included 45 bcf in the Midcontinent and 31 bcf on the Gulf Coast.
Peter Gaffney has agreed to become interim Maxus CEO after the YPF-Maxus merger. In addition to a longtime role as an adviser to Maxus, Gaffney is a founding partner of Gaffney, Cline & Associates, a reservoir engineering firm.
Current Maxus CEO Charles L. Blackburn has been asked to become a consultant to YPF and remain a member of the Maxus board.
Copyright 1995 Oil & Gas Journal. All Rights Reserved.
