PennzEnergy, the exploration and production company spawn of therestructuring of Pennzoil and Quaker State, could be an attractivetakeover target for a large independent producer or integratedenergy company, according to an analyst who follows the company.

“Their stated intention is to grow the company, and in theirwords ‘it’s not for sale,'” said J.P. Morgan analyst Jay Wilson.”My own opinion is that the stock is significantly undervalued, andin my mind it is a potential takeout candidate.

“There’s a chewable poison pill feature there. If somebody putsin a bid that exceeds the average closing price for the previous 20days by 35%, the shareholders will get the vote. The stock hasn’ttraded for 20 days yet. I’m not saying this is imminent. I don’thave insider information . I do believe the company has veryattractive assets.. I think the assets will be attractive to a lotof the larger E&ampP companies as well as possibly some of theintegrateds.”

On Dec. 30, Quaker State Corp. was merged into Pennzoil ProductsGroup (Pennzoil Company’s marketing, manufacturing and fast oilchange businesses) to form Pennzoil-Quaker State, which is tradedon the New York Stock Exchange. Pennzoil and Quaker State last weekcompleted a restructuring designed to separate the companies’automotive businesses from exploration and production operations.The restructuring includes the spin-off of Pennzoil’s ProductsGroup and combines the marketing, manufacturing and fast oil changebusinesses of Pennzoil with all of Quaker State.

Meanwhile, Pennzoil Co. has been renamed PennzEnergy Co. andtrades on the New York Stock Exchange with the symbol PZE. Thecompany continues as one of the largest U.S.-based independentE&ampP companies.

“Separating the automotive consumer products company from ouroil and gas business creates two highly-focused, pure-playcompanies and allows our shareholders to realize the full value ofeach business,” said James L. Pate, chairman of both companies andCEO of Pennzoil-Quaker State.

Stephen D. Chesebro’, president and newly appointed CEO ofPennzEnergy, said, “PennzEnergy emerges today as a focused andwell-positioned independent exploration and production company withhigh quality assets and great growth potential.” Chesebro’ was CEOof Tenneco Energy before it was spun off from Tenneco Inc. andacquired by El Paso.

PennzEnergy core domestic regions include South Texas, WestTexas, East Texas, southern Louisiana and the Gulf of Mexico.Internationally, it holds exploration and development concessionsin Azerbaijan, Egypt, Qatar and Venezuela.

With the restructuring complete, former Pennzoil shareholdersnow own one share of Pennzoil-Quaker State Co. common stock and oneshare of PennzEnergy common stock for each share of common stock ofPennzoil.

Joe Fisher, Houston

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