Houston-based Newfield Exploration Co. entered the new Milleniumwith a bang, agreeing to buy rival Lariat Petroleum Inc. for nearly$333 million in cash, stock and assumed debt, and boosting itsreserves by about 40%. The properties, 90% in the Anadarko Basin ofOklahoma, produce 60 MMcf/d, and include 256 Bcf of reserves.
To make the deal, Newfield, an independent that explores andproduces oil and gas in Louisiana, Texas, the Gulf of Mexico and inChina and Australia, will pay about $180 million, half in cash andhalf in stock, and assume nearly $153 million in debt. Newfieldexecutives said the Lariat acquisition is part of a long-term planto add a new focus area in a major U.S. gas-producing area. Whenthe transaction is completed, Newfield’s largest focus area willcontinue to be the Gulf of Mexico, where about 60% of its reservesare located. Following the purchase, Newfield will have 906 Bcf ofreserves.
Lariat has an inventory of more than 200 drilling locations, andoperates 80% of its proved reserves. Its natural gas assets areestimated to have a reserve life index of about 11 years.
“During the past year, we’ve talked about adding a new focusarea in another major U.S. gas producing basin,” said Newfield CEODavid A. Trice. “We have emphasized that the best way for Newfieldto accomplish this objective would be through the acquisition of anoperating E&P company with strong management and qualityassets.”
Trice said Lariat and Newfield “are very much alike. “We havethe same business principles and have been successful in combininggood people, technology and a balanced approach betweenacquisitions and exploration.” He said his company’s financialstrength and Lariat’s experienced employees make him confident that”this transaction will lead to future growth.”
Newfield’s Trice said last Friday that the company remains ontarget to produce 139 Bcfe for 2000, a 22% increase over 1999.Forthe fourth quarter of 2000, Newfield expects to realize an averagegas price of about $4/Mcf, net of hedging activities.
Randy Foutch founded Tulsa-based independent Lariat in 1996, andhe will remain president of Lariat following the closing, expectedin mid-January. He also will be added to Newfield’s managementteam.
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