Mitchell CEO To Reduce Ownership to Under 50%
George Mitchell, the philanthropic-minded CEO and majority stakeholder of The Woodlands, TX-based Mitchell Energy & Development Co., is putting 4.5 million of his company shares on the block to improve the company's liquidity and reduce his ownership to under 50%. The secondary offering would leave the 82-year-old with 22.9 million shares --- about 45.5% of the independent company he founded.
Mitchell, who now holds about 57% of the company's stock, had put the company on the sale block almost two years ago, but took it off in April 2000 when the price was lower than he had expected (see NGI, Oct. 11, 1999; April 10, 2000). By offering the stock, analysts believe the company could attract more institutional investors, and perhaps a buyer.
Almost 75% of the company's 1.5 Tcf of reserves are from the Barnett Shale in North Texas, which has had astounding success in recent months. In December, the company set its highest capital spending program since the heyday of the 1980s, increasing its 2001 capital spending budget by 45% and allocating $325 million of its $473 million total for exploration and production alone. All of the capital spending is to come from operating cash flow (see NGI, Dec. 18, 2000).
Most of the E&P increase is directed toward the Barnett Shale, where 276 new wells are included in the company's 12-rig program, which is more than double 2000 levels. Mitchell said in December that the company expected to maintain its new level of spending "for at least the next three years and increase our natural gas production over this period by more than 20% compounded annually."
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