Shares in New Orleans-based producer Energy Partners Ltd. (EPL) closed up a whopping 31.14% on the day, an increase of $5.73/share on news the company is the acquisition target of Australia’s Woodside Petroleum Ltd. in an $883 million deal.
More than 12.2 million shares traded, nearly 13 times normal volume. The closing price was $24.13, in the middle of the stock’s 52-week range of $16.37-$32.98.
EPL acknowledged the offer and told shareholders to ignore, at least for now, the unsolicited proposal from ATS Inc., a wholly owned subsidiary of Woodside, to acquire control of the company for $23/share. The offer could go to $24/share under certain circumstances, Woodside said in its announcement of the offer. The unsolicited proposal is conditioned on termination of EPL’s pending merger with Stone Energy Corp., which was announced June 23 (see Daily GPI, June 26; June 19; May 30).
That deal announcement ended months of merger negotiations, which started on April 24 when Stone announced that it would be acquired by Plains Exploration in a stock-for-stock transaction valued at $1.94 billion, including $1.46 billion in stock and $483 million in debt assumption (see Daily GPI, April 25). EPL then chipped in with its own bid on May 25, a $2 billion offer that Stone later concluded was superior to the Plains transaction (see Daily GPI, June 19). Stone terminated its agreement with Plains, and EPL said it would pay the $43.5 million termination fee.
Stone Energy in a press release Monday said it had been made aware of the Woodside/ATS offer for EPL. “Stone management and its board are reviewing and evaluating this announcement from ATS,” the company said. “Stone intends to move forward on the proposed combination with EPL as is contemplated in the merger agreement with EPL.”
Monday EPL said its board “will meet in due course to review and discuss the ATS proposal and will advise stockholders of its position.”
“We are building a significant presence in the Gulf and the acquisition of EPL would be a valuable addition to what is already an important business for us,” said Woodside CEO Don Voelte. “Woodside already has considerable operations in Louisiana and this acquisition allows us to grow our presence in the New Orleans area.”
The deal follows last year’s takeover by Woodside Energy USA of Houston-based Gryphon Exploration Co. (see Daily GPI, Sept. 2, 2005). Woodside paid $282.7 million to acquire Gryphon, a private upstream oil and gas company with exploration and production interests in the Gulf.
EPL has reported interests in 120 blocks, almost all of which are in the Gulf of Mexico. As of Dec. 31, EPL reported proved reserves of 59.3 MMboe, 53.1% oil and 46.9% natural gas. In the second quarter the company recorded average daily production of 28,117 boe.
ATS currently holds 1.719 million shares of EPL, or about 4.5% of total shares outstanding. ATS is taking its offer directly to EPL shareholders and also is contesting in court the agreement between EPL and Stone Energy relating to termination fees associated with the aborted Stone-Plains deal. There are two sets of fees, and if both are terminated, ATS said it would sweeten its offer for EPL to $24/share. If only one set of fees is terminated, the offer would be $23/share.
In the latest deal, Evercore Partners and Banc of America Securities LLC are financial advisors to EPL and Cahill Gordon & Reindel LLP is EPL’s legal counsel.
Founded in 1998 and based in New Orleans, EPL is an independent oil and gas exploration and production company with operations focused along the U.S. Gulf Coast, both onshore in South Louisiana and offshore in the Gulf of Mexico.
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