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BP, Amoco aim is growth
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August 12, 1998: 8:16 p.m. ET
Company chiefs say combination will produce well-rounded energy firm
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NEW YORK (CNNfn) - One day after inking the largest industrial merger in history, the chief executives of British Petroleum PLC and Amoco Corp. are focusing on combining the assets to create a well-rounded energy portfolio.
Appearing Wednesday on "Moneyline News Hour with Lou Dobbs," John Browne, chief executive officer of British Petroleum, and Amoco Chairman Larry Fuller said the deal is not a reflection on the current oil market, but was born out of the desire to diversify.
"The state of the spot market in oil had little to do with it. This is a long-range view of what company will succeed in the time beyond the next century," Fuller said.
The combined company will have reserves of approximately 14.8 billion barrels of oil and gas equivalent and daily production of about 3 million barrels.
Once the merger is final, the company will be known as BP Amoco PLC and be based in London.
Analysts immediately applauded the deal, saying it capitalizes on Amoco's strengths in U.S. refining, chemicals and natural gas, helping to round out BP's offerings.
Browne said the deal gives the partners the varied portfolio they need, along with greater scope at reduced cost.
"This industry is marked by strong competitive forces. We need to be fit to compete in the next century," he said.
However, Browne said the deal was not done solely to create a larger company. (274K WAV) or (274K AIFF)
Amoco's Fuller said another reason the deal made sense was the way the company's oil and gas exploration assets fit together.
"The scale and quality of the international exploration production assets that will arise out of this are something we've desired for a long time. (Amoco) has done well in niche places like Egypt, Trinidad and Argentina. This will allow us to move forward as we wouldn't have been able to as a single company," he said.
For employees, the downside of the deal is the expected 6,000 job cuts that will help generate the anticipated $2 billion additional pre-tax annual revenues.
Browne said the layoffs are a regrettable part of the deal, but necessary.
"The layoffs are half the savings. We can't have two people doing one job. The other half will come from reduced exploration costs, better equipment and elimination of duplication," he said.
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British Petroleum
Amoco
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