Pogo Producing Co., Houston, and Arch Petroleum Inc., Fort Worth, have entered into a definitive merger agreement. The deal is valued at about $115 million, including the assumption by Pogo of $48.5 million in Arch debt and production payment obligations.
Under terms of the deal, Arch will become a wholly owned subsidiary of Pogo. The combined company would have had 860.7 bcfe of proved reserves at yearend 1997. Combined daily production would have been about 203.2 MMcfd of gas and 22,182 b/d of liquids during the first quarter.
The tax-free, stock-for-stock transaction will be accounted for on a pooling-of-interests basis. It involves a fixed exchange ratio of one share of Pogo common stock for 10.4 shares of Arch common stock. Holders of Arch preferred stock will receive one Pogo common share for each 1.04 shares.
Former Arch stockholders will own about 6% of Pogo common shares after the merger takes place. The total number of outstanding Pogo shares at the time will be 40.1 million.
Pogo holds interests in 103 lease blocks in the Gulf of Mexico. Both firms have operations in West Texas.
Pogo Chairman, Pres., & CEO Paul G. Van Wagenen said, "Arch'sellipseinventory of highly prospective Canadian acreage and prospects are just beginning to be explored and developed, and will provide Pogo with another international area that will complement Pogo's existing successful operations inellipseThailand, further diversifying Pogo's international exploration and production efforts."
The merger has been approved by both companies' boards. Meanwhile, owners of about 47% of Arch's stock have agreed to vote in favor of the deal.
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