Analyst: PennzEnergy Attractive for Takeover
PennzEnergy, the exploration and production company spawn of the
restructuring of Pennzoil and Quaker State, could be an attractive
takeover target for a large independent producer or integrated
energy company, according to an analyst who follows the company.
"Their stated intention is to grow the company, and in their
words 'it's not for sale,'" said J.P. Morgan analyst Jay Wilson.
"My own opinion is that the stock is significantly undervalued, and
in my mind it is a potential takeout candidate.
"There's a chewable poison pill feature there. If somebody puts
in a bid that exceeds the average closing price for the previous 20
days by 35%, the shareholders will get the vote. The stock hasn't
traded for 20 days yet. I'm not saying this is imminent. I don't
have insider information . I do believe the company has very
attractive assets.. I think the assets will be attractive to a lot
of the larger E&P companies as well as possibly some of the
On Dec. 30, Quaker State Corp. was merged into Pennzoil Products
Group (Pennzoil Company's marketing, manufacturing and fast oil
change businesses) to form Pennzoil-Quaker State, which is traded
on the New York Stock Exchange. Pennzoil and Quaker State last week
completed a restructuring designed to separate the companies'
automotive businesses from exploration and production operations.
The restructuring includes the spin-off of Pennzoil's Products
Group and combines the marketing, manufacturing and fast oil change
businesses of Pennzoil with all of Quaker State.
Meanwhile, Pennzoil Co. has been renamed PennzEnergy Co. and
trades on the New York Stock Exchange with the symbol PZE. The
company continues as one of the largest U.S.-based independent
"Separating the automotive consumer products company from our
oil and gas business creates two highly-focused, pure-play
companies and allows our shareholders to realize the full value of
each business," said James L. Pate, chairman of both companies and
CEO of Pennzoil-Quaker State.
Stephen D. Chesebro', president and newly appointed CEO of
PennzEnergy, said, "PennzEnergy emerges today as a focused and
well-positioned independent exploration and production company with
high quality assets and great growth potential." Chesebro' was CEO
of Tenneco Energy before it was spun off from Tenneco Inc. and
acquired by El Paso.
PennzEnergy core domestic regions include South Texas, West
Texas, East Texas, southern Louisiana and the Gulf of Mexico.
Internationally, it holds exploration and development concessions
in Azerbaijan, Egypt, Qatar and Venezuela.
With the restructuring complete, former Pennzoil shareholders
now own one share of Pennzoil-Quaker State Co. common stock and one
share of PennzEnergy common stock for each share of common stock of
Joe Fisher, Houston