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With Vastar, BP Adds Another Jewel to Crown

With Vastar, BP Adds Another Jewel to Crown

BP further has cemented its position as the top natural gas producer in North America by acquiring the outstanding minority interest in Houston-based independent producer Vastar Resources Inc.

BP already had owned 81.9% of Vastar's common stock as a result of its merger with Atlantic Richfield Co. last April. It picked up the remaining 18.1% interest, or approximately 17.7 million shares, on Sept. 15 when Vastar's minority shareholders voted to accept the London-based producer's offer of $83 per share. The deal was valued at nearly $1.5 billion.

About 250 of Vastar's 1,100 employees are expected to lose their jobs as the company is folded into BP, a BP spokesman in Houston said. The rest will be offered positions either within BP or with companies that perform outsourcing services for BP.

"The Vastar acquisition is a great strategic fit with our U.S. upstream portfolio," said David H. Welch, BP's Houston-based vice president for upstream operations. Specifically, it "strengthens our oil and gas portfolio" in the Mid-Continent, Rocky Mountains, Gulf Coast region, and in the Continental Shelf and deep-water areas of the Gulf of Mexico.

At the end of 1999, Vastar's domestic reserves were pegged at nearly 4.1 Tcf gas equivalent, and its average daily equivalent production had reached a record 1.43 Bcf. BP's gas production in the United States was posted at 3.2 Bcf/d in the second quarter of this year.

Worldwide, BP said it hopes to achieve gas production of 8 Bcf/d by the end of this year, and 9 Bcf/d by the end of 2001.

Vastar is the latest jewel in BP's crown, having acquired Amoco, Arco and Burmah Castrol plc. It first announced its intention to acquire Vastar last March upon completing its transaction to buy Arco, which had held the nearly 82% interest in Vastar.

The corporate name, Vastar, will cease to exist, according to the BP spokesman. Also, the London-based company will no longer be called BP Amoco, he said, but instead will be known simply as BP.

Susan Parker

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