Houston-based Plains Exploration & Production Co. (PXP) said last Tuesday it has closed its acquisition of Pogo Producing Co. following approval by both companies' stockholders.
In July PXP announced plans to bail out its troubled cross-town peer in a stock and cash transaction valued at $3.6 billion (see NGI, July 23). The deal gives PXP estimated proved reserves of 635 million boe and a total estimated reserve potential of 1.4 billion boe of proved, probable and possible reserves.
At year-end 2006 pro forma for asset sales, Pogo reported 219 million boe of proved reserves. Pogo owns about 1.9 million gross leasehold acres in oil and gas provinces in the United States, 6.4 million acres in New Zealand and 1.5 million acres in Vietnam.
Each Pogo stockholder will receive cash, shares of PXP common stock or a combination of both. The value of the merger consideration to be received with respect to each share of Pogo common stock will be equal to $58.48 based on the 10-trading-day average closing sales prices of PXP common stock ending on the fifth day before the merger. PXP issued approximately 40 million shares of common stock and paid approximately $1.5 billion in cash. Total shares outstanding are approximately 113 million. For financial reporting purposes the acquisition is effective Nov. 6.
Thomas A. Fry, III and Charles G. Groat, both former members of the Pogo board of directors, will join the PXP board. James C. Flores will remain the chairman, president and CEO and PXP's current management, including its executive staff, will continue in their current capacities.
Last month Fir Tree Partners, one of PXP's major investors, announced it had resolved issues that had previously prompted it to say it would vote against the deal and would instead support the acquisition (see NGI, Oct. 15; Sept. 17).
Pogo management had been under increasing pressure to build value in the company since activist hedge fund Third Point LLC purchased a 7.2% stake in the independent last year, which made it the largest shareholder (see NGI, Nov. 27, 2006). Third Point over the course of several months demanded that Pogo refocus its operations and called on CEO Paul G. Van Wagenen to resign.
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