graphic
News > Deals
Conoco to buy Gulf Canada
May 29, 2001: 10:06 a.m. ET

Oil producer set to acquire exploration company for $4.3B plus debt
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - Integrated oil producer Conoco Inc. said Tuesday it agreed to buy Gulf Canada Resources Ltd. for C$6.7 billion ($4.3 billion) in cash and also assume about $2 billion of debt.

graphic  
The move to acquire Calgary, Alberta-based Gulf Canada is designed to bolster Conoco's energy production and expand its reserves in North America and Southeast Asia.

Based on the agreement by the boards of both companies, Houston-based Conoco will pay $8.02 (C$12.40) for each share of Gulf Canada (GOU: up $1.98 to $7.90, Research, Estimates) , representing a 34 percent premium to Gulf Canada's close Monday of C$9.25 per share on the Toronto Stock Exchange.

The proposed acquisition is expected to be completed in the third quarter. It also includes a $220 million breakup fee, which Gulf Canada is liable to pay to Conoco should the deal collapse.

"The acquisition of Gulf Canada will increase Conoco's North American proved natural gas reserves and production by more than 50 percent and establishes Southeast Asia as a strong, fourth core business area with the addition of Gulf Canada's interest in Gulf Indonesia Resources Ltd.," Conoco Chairman and CEO Archie W. Dunham said. "The transaction is consistent with our strategy to rapidly grow the natural gas portion of our portfolio."

J.P. Morgan analyst Jay Wilson said the acquisition is a "great strategic fit at a very attractive price" for Conoco, which is the No. 4 U.S. oil company.

Wilson raised his price target for Conoco (COC.A: down $0.13 to $31.33, Research, Estimates) class A shares to $36 from $32 and boosted his estimate for Conoco's 2001 earnings per share to $3 from $2.25 and his 2002 estimate to $3.03 to $2.38.

Prudential Securities analyst Mike Mayer said he wasn't sure yet exactly how helpful the deal would be to Conoco's earnings, but it looks like a good deal for Conoco.

"Our initial impressions are that the assets offer an excellent fit with Conoco's current operations and growth plans, and that the purchase price of $6.21 per barrel of oil equivalent is reasonable in the present oil and gas price environment," Mayer said. graphic

  RELATED STORIES

Exxon, Conoco earnings up sharply - April 23, 2001

  RELATED SITES

Conoco


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.