Analysts who cover Barrett Resources Corp. said yesterday thatonce the data rooms are opened, the Denver-based independent mayhave more than one cash-rich suitor interested in picking up thecompany’s assets, which are heavily concentrated in the naturalgas-rich Rocky Mountains. Barrett formally rejected a bid by RoyalDutch Shell Group, which yesterday launched a hostile takeover (seeDaily GPI, March 12).

Shell, 100 times larger than Barrett, has offered $1.8 billionfor Barrett, and with its rejection, is making good on a threat tocarry its offer directly to Barrett’s shareholders. Shell said itsbid represented the “full and fair value” of Barrett, which was 24%higher than its closing price on Feb. 28 of $44.25. However,analysts covering the company think Barrett is worth more.

Dain Rauscher Wessels’ analyst Ray Deacon said he thinks Barrettis easily worth $67 a share, and said he knows some of theshareholders think the price is “north” of that, closer to $75 ashare. On Friday, when Barrett rejected the Shell offer, its stockclosed at $62.52 a share.

“If they go to the shareholders, the shareholders are going tosay to Shell to raise their offer,” Deacon said. “The way I look atit, is that there is a $53 hard net asset on the stock and theprobable reserves add $14 per share. That makes it worth $67 andmost of the shareholders think it’s worth more.”

Deacon said there is “so much cash flow in this high yieldmarket” and several energy companies have the ability to buyBarrett, including Phillips Petroleum Co., Anadarko Petroleum Corp.and Alberta Energy Co. Ltd. “All of those companies have thecapital to make it work.”

Irene Haas, an analyst with Sanders Morris Harris, said shethought it was “not likely” that Shell would up its bid, but couldif there were “serious counter offers.” Haas said there were only a”limited number of players” who had the kind of flexibility thatShell has.

“Barrett is officially up for sale now, though,” Haas said.”They will open their data rooms and take it from there. It will bea challenge for someone to match Shell, though,” and she did notwant to speculate on other potential buyers.

Shell’s fully funded cash offer is conditioned upon it acquiringa majority of Barrett’s outstanding shares. Its offer andwithdrawal rights extend through April 6. On Monday, Shell said ina written statement that it was a “positive sign” that the Barrettboard said it would consider “strategic alternatives,” but said “itis not clear that they are committed to the sale of the company.”

Walter van de Vijver, CEO of Shell Exploration and ProductionCo. of Houston, said, “we continue to believe that the best choiceis to accept our fully funded cash offer.” He said Barrett’s boardhad not called the $55 offer inadequate, speculating that the boardthought it was in an appropriate range.

Of Barrett’s decision to open its data rooms, van de Vijver said”the prolonged auction process could be a distraction to Barrett’semployees and have an adverse impact on their ability toeffectively operate the business. Under the auction process Barretthas established, it could take over two months before Barrettshareholders know if they have any further options.”

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