Speaking on his company’s pending mega-merger with Phillips Petroleum, Conoco CEO Archie Dunham told a Houston civic association that size does not matter much in a corporate merger; it’s how well the companies fit together that is important.

“What really matters is whether or not the merger allows the two companies involved to leverage their respective strengths to create a stronger competitor with enhanced returns and accelerated growth opportunities from an overall, improved financial and operational position,” Dunham said.

The ConocoPhillips merger of equals is currently awaiting final government approval. Announced last November, the merger will create the sixth-largest energy company in the world. The union is expected to reach completion during the second half of this year.

Labeling the merger an “excellent strategic fit” for both companies, Dunham said, “ConocoPhillips will be positioned as a stronger, U.S.-based global energy producer by significantly enhancing its capability and growth prospects on five continents in both current and prospective ventures, while generating major synergies.”

Addressing the Greater Houston Partnership, Dunham said the two companies have an abundance of complementary upstream assets, especially in relation to Conoco’s current established four core business areas: North America, Europe, northern South America and Southeast Asia. Dunham explained how approximately half of the new company’s combined reserves would be in North America, and that almost three-quarters would be in North America and the North Sea.

“In North America, Phillips’ resources in Alaska — which include a major stake in North America’s largest oil field, Prudhoe Bay — complement the significant position Conoco now enjoys in Western Canada,” said Dunham. “In the North Sea, our combined operations in Norway and the United Kingdom dovetail perfectly.

“Thus, the majority of our hydrocarbon reserves will be in politically stable and secure regions of the world, and that’s an important consideration in the aftermath of Sept. 11,” Dunham emphasized.

In addition to synergies in the upstream sector, Dunham said synergies in the downstream sector — which includes the refining and distribution end of the business — are also significant.

“Tripling the size of our existing refining, marketing and transportation businesses, the new company will become the largest refiner-marketer in North America, with a refining capacity in excess of two million barrels per day and 17,000 marketing outlets,” he said, adding that the new company will have an additional 3,000 retail outlets outside North America.

Among some of the more clear-cut financial benefits, Dunham said the combined company’s annual cost savings would exceed $750 million, the balance sheet would be much stronger and there would be more capital for investment. “ConocoPhillips will be a tough, new competitor against the larger, global ‘super-majors,'” he stated.

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