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Ranger Oil Board Backs C$1.6B Bid by Canadian Natural

Ranger Oil Board Backs C$1.6B Bid by Canadian Natural

Ranger Oil Ltd.'s board of directors announced last week that after almost three months of unacceptable bids it's ready to make a recommendation to its shareholders to sell all outstanding shares to another Calgary-based producer, Canadian Natural Resources Ltd (CNRL).

The deal, which tops a hostile bid made by Petrobank Ltd., will offer either C$8.25 in cash per Ranger share up to a maximum of C$650 million (US$442 million), or 0.175 Canadian Natural shares per Ranger share up to a total of 10 million CNRL shares. The C$8.25 a share offer represents a 9% premium over the average closing price for the last 20 days. Terms of the deal call for CNRL to absorb Ranger's debt of C$525 million, which puts the total value of the deal in the area of C$1.6 billion.

This agreement comes just days after Petrobank revised its hostile takeover bid, offering C$5.50 in cash up to $575 million and one $2 preferred share --- and gave Ranger a deadline to agree to the offer. If CNRL's offer is accepted by Ranger's shareholders, Petrobank will have to break off its pre-negotiated C$262 million Ranger non-core asset sale with Alberta Energy Co. (see NGI, June 12)

"This offer is in the best interests of our shareholders. It is the result of a thorough and extensive process, designed to maximize value for Ranger shareholders, which resulted in a number of competing offers. The CNRL bid recognizes the strong underlying value of Ranger's assets and operations. This combination will create a stronger platform to expand Ranger's international activities and pursue new opportunities," said Fred Dyment, Ranger's president. Financial advisors, RBC Dominion Securities and Credit Suisse First Boston, reviewed the deal and found that it was financially favorable to Ranger's shareholders

A pre-acquisition agreement has been signed, and CNRL --- rated as a company on the move by a veteran Canadian market watcher --- is in the process of mailing the formal offers to Ranger's shareholders. In response to the deal, Ranger is no longer reviewing sale alternatives, allowing prospective buyers into the data room, or soliciting other bidders. Ranger Oil has also offered CNRL the right to first refusal regarding future competitor's offers. If the sale does not go through for certain reasons, Ranger will pay a break fee of C$45.9 million. CNRL's acquisition offer will be open for acceptance until the end of July.

CNRL said that the Ranger acquisition would allow it to make a low-risk entry into the international arena because of the pre-existing quality infrastructure. Ranger Oil is involved in oil and natural gas exploration, development, acquisition, production and marketing in North America (the Western Canada Sedimentary Basin and the United states Gulf of Mexico), the United Kingdom sector of the North Sea, Angola, Peru, Ecuador, Namibia, and Cote d'lvoire. For the fiscal year that ended 12/31/99, Ranger's revenues rose 23% to $384 million.

CNRL is the third largest oil and gas producer in Canada. Until this offer, the company's operations had been focused exclusively in Western Canada. Including the assets in this transaction, the company will be producing about 860 MMcf/d of natural gas and 200,000 bbl/d of oil.

Alexander Steis

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