Calgary-based Berkley Petroleum Corp. might be worth more if it’sbroken up and sold, according to analysts who are tracking the hostiletakeover bid by Hunt Oil Co. (see Daily GPI,Dec. 29, 2000). Dallas-based Hunt offered to buy Berkley in lateDecember for C$1.4 billion, including debt, or about C$10 a share incash for each Berkley share.

In retaliation, Berkley opened its data rooms earlier this month toother potential buyers and adopted a shareholder rights plan to giveits board enough time to generate competing bids and alternativeproposals (see Daily GPI, Jan. 2). Management said it would not rule out any alternatives.

“Most boards and independent committees will want to look at allalternatives, including a breakup when there’s a cash bid for allthe equity on the table,” said Peters & Co. Chairman MichaelTims, who is one of Berkley’s financial advisers. “The firstpriority is finding a white knight to put a superior offer on thetable, but that would have to be weighted against what that kind ofthing would look like.”

Analyst Jim Doak, managing partner with Enterprise CapitalManagement in Toronto, said this week that Berkley might be worthmore to all parties if it is broken up and sold in parts. He saidthat while Hunt would want to keep some of the assets, it might bebetter for both companies to work out a deal to “merchant bank” thebuy.

Another idea proposed by analyst Jeff Fiell with Calgary-basedCanaccord Capital Corp. would be for Berkley to create a royaltytrust from its producing assets and then spin off the other assetsinto exploration.

“Certain parts of Berkley lend themselves to a royaltytrust-type arrangement and other assets lend themselves better tohigh-impact that would have a material impact to a large company,”Fiell said.

Berkley’s assets include properties in the Northwest Territoriesand California, where it holds a gas play in the East Lost Hillsnear Bakersfield. It also has oil production assets in Saskatchewanand natural gas properties in northern Alberta.

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