Apache Corp.’s definitive agreement to purchase FletcherChallenge Energy’s Canadian and Argentina assets has been in placesince last October, and a company spokesman said yesterday it wasstill a “done deal,” despite an announcement that a consortium madeup of Fletcher investors has made a counter offer to purchase theNew Zealand-based company.

The eleventh-hour bid by the consortium of Peak Petroleum Co. ofNew Zealand Ltd. was for a cash and stock deal similar in structureto the one made last year by Shell Overseas Holdings Ltd. a unit ofRoyal Dutch Shell, and its Houston-based partner Apache (see DailyGPI, Oct. 13, 2000). In the Shell offer, Shell would keep all ofthe New Zealand assets and other international properties andApache would pay Shell about $600 million to acquire Fletcher’sCanadian and Argentina assets.

The Peak consortium’s bid, led by Penn West Petroleum Ltd.,Greymouth Petroleum and investor Guinness Peat Group plc, is higher— it would pay about $1.72 billion, more than the $1.63 billiondeal offered by Shell and Apache. Peak’s offer also offersshareholders more cash — $3.70 a share compared to Shell’s offerof $3.44. Peak would also offer shares in its holding companyRubicon to Fletcher stockholders.

Under Peak’s plan, Calgary-based Penn West would acquireFletcher’s Canadian and Argentina assets — the same ones Apachehas agreed to buy — for nearly the same price. However, Apachecould not acquire the properties without Shell. Still, Apacheremains confident that the original agreement will eventually beapproved.

The Peak deal has “no due diligence, no financing, and they’dhave to start all over,” said Apache spokesman Tony Lentini. “We’llbe done by the end of March with everything and (if the Peak dealwas approved), they’d be starting at square one. They would bemonths away from getting anything done,” he said.

As of yesterday, time was on Apache’s and Shell’s side. OnTuesday (March 6), Fletcher shareholders are meeting to vote on theShell offer. However, the Fletcher board was meeting yesterday toconsider the Peak proposal, which includes a request to adjourn theshareholders’ meeting to March 23. Shell’s agreement could lapse ifit is not closed by March 23 under terms of its offer.

Lentini said that the definitive agreement is different from theoffer that Peak has made, which so far had not included anyfinancing arrangements. Apache and Shell have already receivedapproval by the Fletcher board, completed all regulatoryrequirements and negotiated all necessary agreements.

“This is a done deal. There is money on the table,” saidLentini. “We feel we’ve made a full, fair offer. They would have tostart all over. They are at ground zero on another deal. We’ve gotfaith in the board that when they look at what’s on the table,they’ll take our offer.” Fletcher officials noted yesterday that adeal with Peak could not be closed at the earliest before the endof June.

Apache’s deal is “joined at the hip” with Shell, said Lentini.”We’re a united front.” Acknowledging there have been rumors inrecent weeks about a counteroffer being made to acquire Fletcher,Lentini said that once the Fletcher board looks at its options,”we’re confident that they’ll take our offer.” He could notcomment, however, on whether Shell and Apache might increase theirbid.

If Penn West were able to make the deal to acquire Fletcher’sCanadian assets, the properties complement existing assets in PennWest’s core areas. Fletcher’s Canadian assets are located inProvost, SK, and central Alberta. Provost fits within Penn West’sPlains area, which includes its Wainwright and Esther properties.Saskatchewan includes a major gas property at Hatton, similar toPenn West’s holdings there. And in central Alberta, Penn West hasoperations in the Pembina area.

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