Excitement and anticipation, rather than anxiety, prevailed onthe Canadian end of the mammoth merger announced earlier this monthbetween British Petroleum (60%) and Amoco Corp. (40%), thanks tonatural gas.
Sources inside the downtown Calgary headquarters of AmocoCanada, a 50-year-old, wholly-owned subsidiary of its Chicagonamesake, said the announcement that BP is expected to be runningtheir show by the end of the year set off smiles rather than fearfor good reasons.
The $48 billion deal is expected to pose little or no threat ofupheaval to Canadian staff and operations, while changing acorporate leadership renowned for conservatism, caution and centralcontrol from Chicago. Unlike in other parts of the world where thepair operate, there can be no dismissals due to mirror-imageorganizations and staff redundancies. British Petroleum sold off BPCanada on stock exchanges eight years ago, where it became the coreof today’s Talisman Energy. At the time, BP rated its Canadianoperation as too small for one of the international industry’sbiggest sisters. It took Talisman a string of takeovers to growinto a leading independent.
Amoco Canada is no small factor. It takes credit for about 13%of Amoco Corp.’s worldwide annual net income, and the Canadianstaff are confident their operation is earning a right to beallowed to continue and grow on its present course.
Thanks to its stature as Canada’s top gas producer, Amoco Canadastands out as one of the few energy operations on the planet toscore increased profits so far this year. The parent companyrecently disclosed Amoco Canada netted US$107 million in first-half1998 compared to $103 million a year earlier.
Amoco’s Canadian gas production rose to 769 MMcf/d so far in1998, compared to 749 MMcf/d a year earlier. The figure is on therise due to an aggressive drilling program on Amoco Canada’s vastholdings of drilling leases. This year’s results already includeCanada’s two richest wells. A 70 MMcf/d producer recently drilled15,800 feet into the prolific Rocky Mountain foothills atBlackstone, 150 miles northwest of Calgary. The only largerproducer is another Amoco well in the same area yielding 80 MMcf/d.
Gordon Jaremko, Calgary
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