Ranger Oil Ltd.’s board of directors announced last week thatafter almost three months of unacceptable bids it’s ready to make arecommendation to its shareholders to sell all outstanding sharesto another Calgary-based producer, Canadian Natural Resources Ltd(CNRL).

The deal, which tops a hostile bid made by Petrobank Ltd., willoffer either C$8.25 in cash per Ranger share up to a maximum ofC$650 million (US$442 million), or 0.175 Canadian Natural sharesper Ranger share up to a total of 10 million CNRL shares. TheC$8.25 a share offer represents a 9% premium over the averageclosing price for the last 20 days. Terms of the deal call for CNRLto absorb Ranger’s debt of C$525 million, which puts the totalvalue of the deal in the area of C$1.6 billion.

This agreement comes just days after Petrobank revised its hostiletakeover bid, offering C$5.50 in cash up to $575 million and one $2preferred share — and gave Ranger a deadline to agree to theoffer. If CNRL’s offer is accepted by Ranger’s shareholders, Petrobankwill have to break off its pre-negotiated C$262 million Rangernon-core asset sale with Alberta Energy Co. (see NGI, June 12)

“This offer is in the best interests of our shareholders. It isthe result of a thorough and extensive process, designed tomaximize value for Ranger shareholders, which resulted in a numberof competing offers. The CNRL bid recognizes the strong underlyingvalue of Ranger’s assets and operations. This combination willcreate a stronger platform to expand Ranger’s internationalactivities and pursue new opportunities,” said Fred Dyment,Ranger’s president. Financial advisors, RBC Dominion Securities andCredit Suisse First Boston, reviewed the deal and found that it wasfinancially favorable to Ranger’s shareholders

A pre-acquisition agreement has been signed, and CNRL — ratedas a company on the move by a veteran Canadian market watcher —is in the process of mailing the formal offers to Ranger’sshareholders. In response to the deal, Ranger is no longerreviewing sale alternatives, allowing prospective buyers into thedata room, or soliciting other bidders. Ranger Oil has also offeredCNRL the right to first refusal regarding future competitor’soffers. If the sale does not go through for certain reasons, Rangerwill pay a break fee of C$45.9 million. CNRL’s acquisition offerwill be open for acceptance until the end of July.

CNRL said that the Ranger acquisition would allow it to make alow-risk entry into the international arena because of thepre-existing quality infrastructure. Ranger Oil is involved in oiland natural gas exploration, development, acquisition, productionand marketing in North America (the Western Canada SedimentaryBasin and the United states Gulf of Mexico), the United Kingdomsector of the North Sea, Angola, Peru, Ecuador, Namibia, and Coted’lvoire. For the fiscal year that ended 12/31/99, Ranger’srevenues rose 23% to $384 million.

CNRL is the third largest oil and gas producer in Canada. Untilthis offer, the company’s operations had been focused exclusivelyin Western Canada. Including the assets in this transaction, thecompany will be producing about 860 MMcf/d of natural gas and200,000 bbl/d of oil.

Alexander Steis

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