NGI The Weekly Gas Market Report
BP further cemented its position as the top natural gas producerin North America last week when it acquired the outstandingminority interest in Houston-based independent producer VastarResources Inc.
BP already had owned 81.9% of Vastar’s common stock as a resultof its merger with Atlantic Richfield Co. last April. It picked upthe remaining 18.1% interest, or approximately 17.7 million shares,Friday when Vastar’s minority shareholders voted to accept theLondon-based producer’s offer of $83 per share. The deal wasvalued at nearly $1.5 billion.
About 250 of Vastar’s 1,100 employees are expected to lose theirjobs as the company is folded into BP, a BP spokesman in Houstonsaid. He noted that 750 of Vastar’s employees will be offeredpositions within BP, and 100 employees will be offered jobs atcompanies that perform contract 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 vicepresident for upstream operations. Specifically, it “strengthensour oil and gas portfolio” in the Mid-Continent, Rocky Mountains,Gulf Coast region, and in the Continental Shelf and deep-waterareas of the Gulf of Mexico.
At the end of 1999, Vastar’s domestic reserves were pegged atnearly 4.1 Tcf gas equivalent, and its average daily equivalentproduction had reached a record 1.43 Bcf. BP’s gas production inthe United States was posted at 3.2 Bcf/d in the second quarter ofthis year.
Worldwide, BP said it hopes to achieve gas production of 8 Bcf/dby the end of this year, and 9 Bcf/d by the end of 2001. Itrecorded gas production of about 7.7 Bcf/d during the secondquarter, and Vastar — one of the largest independent producers inthe U.S. — is expected to help BP achieve its production targetsfor 2000 and 2001.
Vastar is the latest jewel in BP’s crown, having acquired Amoco,Arco and Burmah Castrol plc. It first announced its intention toacquire Vastar last March upon completing its transaction to buyArco, which had held the nearly 82% interest in Vastar.
The corporate name, Vastar, will cease to exist, according tothe BP spokesman. Also, the London-based company will no longer becalled BP Amoco, he said, but instead will be referred to as simplyBP.
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