Just days after Houston-based Anadarko said it would boost itsspending in Canada this year (see NGI, Feb. 12), the independentplayed white knight last week, agreeing to acquire gas-rich BerkleyPetroleum Corp. for $777 million, further boosting its Canadianreserves and pulling the rug out from under another Texas-basedproducer that had set its sights on the company two months ago.
The deal, which has already been unanimously approved by bothdirectors’ boards, would pay Berkley shareholders the equivalent ofC$11.40 per share in cash. Anadarko also would assume about $250million in Berkley debt. Anadarko’s offer exceeded by about 10% acompeting takeover bid by Dallas-based Hunt Oil Co. made Feb. 5.Berkley’s board recommended that shareholders approve the deal.
For the bridesmaid Hunt, a subsidiary of Hunt Consolidated Inc.,the accepted Anadarko offer squashed a three-month long plan toboost its Canadian reserves by adding Berkley, which began inDecember. The bid was knocked back by Berkley, which called theinitial offer too low and, among other things, opened its datarooms in January in an effort to lure other buyers and thenunanimously rejected Hunt’s offer (see NGI, Jan. 22). Hunt ownsabout 10% of Berkley’s stock; the bid by Anadarko requires that66.67% of the shares of Berkley be tendered.
Berkley’s assets stretch from Western Canada to California; itsCanadian assets would become part of Anadarko’s existing Canadiancompany, Anadarko Canada Corp., headquartered in Calgary. Berkley’sexploration and production focuses on properties situated nearexisting Anadarko properties in the Western Canadian SedimentaryBasin in Alberta, northeastern British Columbia, the NorthwestTerritories and southeastern Saskatchewan.
Anadarko estimates that Berkley holds 95 MM boe of net provedreserves (after royalties), of which 70% is natural gas. Currentaverage daily net production is 10,900 bbl and 116 MMcf of naturalgas (14,500 bbl and 155 MMcf/d on a working interest basis).Berkley has 140 total employees, which Anadarko expects to keep.Anadarko did not detail how Berkley’s properties outside of Canadawill fit into its business, and said those plans will be announcedin the future.
Although smaller in size, the Berkley acquisition would be thesecond into Canada for Anadarko in less than a year. Anadarko boughtUnion Pacific Resources last year for about $4.4 billion in stock (seeNGI, April 10, 2000). The UPR deal madeAnadarko the sixth largest natural gas producer in North America andgave it the fifth largest natural gas reserves. Counting Berkley’sacreage, Anadarko would hold 4.7 million acres net (3.5 millionundeveloped net, 1.2 million developed net) in Canada in all of themajor Canadian exploration gas plays, particularly in northeasternBritish Columbia, the Alberta foothills, the Northwest Territories,the Scotian Shelf and the Mackenzie Delta.
Anadarko CEO Robert J. Allison called the Berkley acquisition a”great deal. It fast tracks growth of our Canadian natural gasbusiness. In addition to being a good fit with our existingstrategy, the deal meets our basic criteria because it is accretiveto earnings, cash flow and growth.”
Jim Emme, the Anadarko Canada Corp. president, said, “bothcompanies have a common vision to grow through exploration. Ourplays and acreage are complementary.” He said that since the mergerwith UPR, Anadarko had implemented plans to grow its Canadian gasreserves. “This deal accelerates our long-term strategy by at leastthree years.”
Anadarko said it would mail its offer by this Friday (Feb. 23),which would remain open for 21 days from the date of mailing.Berkley has agreed to discontinue its efforts to seek and considerstrategic alternatives, to close its data rooms, not solicit otherproposals and to provide Anadarko the right to match competingoffers. In certain circumstances, if Anadarko’s offer is notcompleted, Berkley has agreed to pay a break fee of C$48 million toAnadarko.
Carolyn Davis, Houston
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