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Vintage Deal to Acquire El Paso Uinta Properties Collapses

Vintage Deal to Acquire El Paso Uinta Properties Collapses

Negotiations to sell Vintage Petroleum Inc. some of El Paso Corp.'s producing properties in the Uinta Basin of Utah have ended after the two companies failed to reach an agreement before the scheduled closing date. The $52.5 million acquisition, announced in November, would have given Vintage an 80% operated working interest in about 200,000 net acres (see Daily GPI, Nov. 12, 2003).

Tulsa-based Vintage said in a statement that the agreement has been terminated by both parties.

"We pride ourselves on our ability to close acquisitions once we enter into negotiations, and I cannot recall any other instance in Vintage's long acquisition history when we have been a party to an acquisition agreement and closing has not occurred," said Vintage CEO S. Craig George. "We remain committed to growth both through acquisitions and the drillbit and will continue to be a significant player in the acquisition marketplace with a focus on opportunities where we can add value."

When the acquisition was announced in November, Vintage had announced that the deal would up its 2004 targets, and those have now been revised, the company said. The El Paso properties currently produce 2,000 bbl/d of oil and natural gas liquids and 920 Mcf/d. In addition to the property interests, Vintage was to acquire the majority interest and operational control of some of El Paso's gas plants, which would have increased Vintage's natural gas gathering and processing income.

If the sale had been completed, Vintage's U.S. gas production target for 2004 was forecast at 24 Bcf; instead, the target is 23.4 Bcf. U.S. oil production would have gone up to 6.7 million bbl; instead, Vintage's target for 2004 is 5.8 million bbl.

"Additional oil price hedges now in place partially offset the impact on the revised cash flow and earnings before interest and taxes targets for 2004," Vintage said in a statement.

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