Amoco Canada Not Fazed by BP/Amoco Marriage
Excitement and anticipation, rather than anxiety, prevailed on the Canadian end of the mammoth merger announced earlier this month between British Petroleum (60%) and Amoco Corp. (40%), thanks to natural gas.
Sources inside the downtown Calgary headquarters of Amoco Canada, a 50-year-old, wholly-owned subsidiary of its Chicago namesake, said the announcement that BP is expected to be running their show by the end of the year set off smiles rather than fear for good reasons.
The $48 billion deal is expected to pose little or no threat of upheaval to Canadian staff and operations, while changing a corporate leadership renowned for conservatism, caution and central control from Chicago. Unlike in other parts of the world where the pair operate, there can be no dismissals due to mirror-image organizations and staff redundancies. British Petroleum sold off BP Canada on stock exchanges eight years ago, where it became the core of today's Talisman Energy. At the time, BP rated its Canadian operation as too small for one of the international industry's biggest sisters. It took Talisman a string of takeovers to grow into 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 Canadian staff are confident their operation is earning a right to be allowed to continue and grow on its present course.
Thanks to its stature as Canada's top gas producer, Amoco Canada stands out as one of the few energy operations on the planet to score increased profits so far this year. The parent company recently disclosed Amoco Canada netted US$107 million in first-half 1998 compared to $103 million a year earlier.
Amoco's Canadian gas production rose to 769 MMcf/d so far in 1998, compared to 749 MMcf/d a year earlier. The figure is on the rise due to an aggressive drilling program on Amoco Canada's vast holdings of drilling leases. This year's results already include Canada's two richest wells. A 70 MMcf/d producer recently drilled 15,800 feet into the prolific Rocky Mountain foothills at Blackstone, 150 miles northwest of Calgary. The only larger producer is another Amoco well in the same area yielding 80 MMcf/d.
Gordon Jaremko, Calgary
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