List of Barrett Suitors Growing
Barrett Resources Corp.'s move to provide "strategic alternatives" to its shareholders, and thus, increase the value if it is taken over, appears to have paid off. Last week, the Denver-based independent apparently received at least two more bids to compete with Royal Dutch/Shell Group's offer of $60 a share. Barrett had set a deadline of last Wednesday for other companies to make an offer.
All of the companies involved in the deals are keeping mum about possible takeovers, except for Shell, which indicated during its first quarter earnings call last week that it was still optimistic about acquiring the gas-rich Barrett.
Shell announced its hostile bid for Barrett, offering $55 a share, in early March, and has been attempting to cajole the company into accepting its offer ever since. Though the acquisition is relatively small for a company of Shell's size, Barrett would be key to the oil giant's shift toward natural gas production.
Shell raised its offer to $60, but that too was rejected by Barrett as inadequate. However, Shell said that it was "prepared to negotiate all terms of the proposal," which indicates it could again revise its bid.
In a letter sent a week ago to Walter van de Vijver, CEO of Shell Exploration and Production Co., Barrett's board responded to Shell's request that the board "consider [Shell's] bid on an equal basis with any others." Barrett invited Shell to submit its "best and final offer" by noon on Wednesday, the date proposals are due for all parties involved in Barrett's previously announced process to seek strategic alternatives.
"These are ground rules applicable to all others," said the letter. In rejecting Shell's offer, the Barrett board said that "the opinion of [financial adviser] Goldman, Sachs, after reviewing with the board many of the factors referred to herein and other financial criteria used in assessing the offer, that, as of April 30, 2001, the $60 Shell offer price is inadequate to Barrett's stockholders."
The letter also stated that it was the board's "continued belief, after discussion with its financial advisers and the board's evaluation of the progress of the previously announced process for seeking strategic alternatives, that there is a reasonable likelihood that the process will yield a superior transaction."
Though the companies would not discuss the deals, The Wall Street Journal reported Thursday that Barrett had received at least two new bids, both from Oklahoma-based companies. Devon Energy Corp., based in Oklahoma City, and Williams Cos. of Tulsa were said to have submitted offers. Either company would be a logical fit, as both are natural gas producers. Barrett's core area is in the Rocky Mountains.
Devon, one of the U.S.'s leading independent producers, owns oil and gas properties concentrated in five operating divisions, the Permian/Mid-Continent, Rocky Mountain and Gulf divisions, which include onshore properties in the continental United States and offshore properties primarily in the Gulf of Mexico, the Canadian division, which includes properties in the Western Canadian Sedimentary Basin in Alberta and British Columbia, and the International Division. About 75% of its proved reserves are in North America.
Though certainly not of Shell's magnitude, Devon also has some muscle: it reported the highest revenues, net earnings and earnings per share of any quarter in the company's history on Thursday. Net earnings were $400 million, or $3.09 per share. Net earnings were $359 million or $2.77 per share --- a 242% increase over first quarter 2000. Devon also increased total production of oil, gas and natural gas liquids to 30.4 MMboe, up slightly from 30.1 MMboe a year ago. Last August, Devon merged with Santa Fe Snyder Corp.
In its weekly energy summary, analysts Dain Rauscher Wessels said last week that "Devon's appetite for coalbed methane acreage has not yet been satisfied," which would indicate that the company is looking for acreage in the Rocky Mountain region.
Through its subsidiaries, Williams engages in several energy-related activities, including transportation and storage of natural gas and related activities; exploration and production of oil and gas; natural gas gathering, processing and treating activities; and natural gas liquids transportation.
Williams filed information regarding its interest in Barrett last Tuesday with the U.S. Securities and Exchange Commission after outside individuals were inadvertently connected to a telephonic conference call of Williams board of directors.
According to a filing with the SEC, the Williams board of directors was considering a "potential proposal to acquire Barrett." The company did not disclose whether the board took any action on the proposal.
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