|
Hess to buy Triton
|
 |
July 10, 2001: 12:46 p.m. ET
Triton shares surge 49%; access to Equatorial Guinea a coveted prize
|
NEW YORK (CNNfn) - Amerada Hess Corp. agreed Tuesday to acquire Triton Energy Ltd. for $2.7 billion in cash, in a move that will boost the energy firm's oil and gas production.
Terms of the deal call for Amerada Hess to pay $45 a share for Dallas-based Triton, nearly a 51 percent premium to Triton's Monday closing price of $29.90 a share. Amerada Hess will also assume about $500 million in debt.
"The acquisition of Triton strengthens our exploration and production business, gives us access to long-life international reserves, substantially increases our production growth and provides significant exploration potential," CEO John Hess said.
Buyout firm Hicks Muse Tate & Furst Inc. committed to sell its 38 percent stake in Triton. Hicks Muse originally acquired its stake when it invested $350 million in 1998 and early 1999.
The boards of both companies have approved the transaction, which is still subject to regulatory approval. The purchase is expected to close in the third quarter, the companies said in a statement.
News of the deal caused Triton (OIL: up $14.57 to $44.47, Research, Estimates) shares to rocket nearly 49 percent in afternoon trading while Amerada Hess (AHC: down $1.96 to $77.40, Research, Estimates) dropped nearly 3 percent.
Click here to check other energy stocks
The transaction is expected to add to Hess earnings and cash flow in 2002 and boost Hess' oil production in 2002 to 535,000 barrels a day from 425,000 barrels. Production in 2003 will rise to 600,000 barrels, Hess said.
New York-based Amerada Hess is a engaged in the production and exploration of crude oil and natural gas in countries such as the United States, Brazil, Indonesia, and Malaysia. Dallas-based Triton has oil and gas assets in West Africa, Latin America, and Southeast Asia.
The purchase will give Amerada Hess access to Equatorial Guinea where Triton owns about 1.5 million acres, said analyst Eugene Nowak, of ABM AMRO Inc.
Triton has made three discoveries in Equatorial Guinea. The most recent discovery made was at the Oveng-1 well on June 25, which could produce 50 million-to-150 million barrels of recoverable oil, Triton said.
"The big kicker here is the potential for oil and gas in Equatorial Guinea," Nowak said. "This will give Hess potential significant upside if they have additional discoveries there."
The purchase of Triton is reasonable with Hess paying about $5.66 a barrel for approved and probable reserves, Nowak said.
Triton had revenue of about $328.5 million in 2000, compared with Hess, which had about $12 billion. Triton has about 200 employees, compared with Hess' nearly 10,000.
Earlier this year, Hess backed out of its efforts to buy Lasmo PLC, Britain's second-largest oil producer, after Eni SpA trumped Hess' $3.5 billion offer for Lasmo. Hess said then that it still was in the acquisition game but would wait for the right partner.
The energy sector has been in the midst of consolidating for years and will continue. "Bigness matters in the oil business," Nowak said. "Companies want to get bigger and stronger. With Triton, Hess moves up another peg so they now have more entrée into a variety of areas." 
|
|
|
|
|
 |
|
