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Petroleum industry

BP Amoco and ARCO Announce Deal to Address Merger Concerns

Strategic Insights

— 2 min read

BP Amoco Plc and Atlantic Richfield Co. (ARCO) have announced several deals aimed at addressing concerns from federal regulators over the proposed $34 billion merger between the two companies. The agreements include a $7 billion sale of ARCO's Alaskan assets to Phillips Petroleum Co., a deal that is contingent upon the completion of the BP Amoco-ARCO merger. In addition, BP Amoco is selling ARCO's Oklahoma pipeline and storage interests to a Duke Energy subsidiary and has made an offer to buy out a Houston-based natural gas and liquid hydrocarbon company.

Key Takeaways:

  • The $7 billion sale of ARCO's Alaskan assets to Phillips Petroleum Co. is aimed at pacifying federal regulators concerned over the proposed BP Amoco-ARCO merger.
  • The deal includes the sale of 1.9 billion barrels of oil equivalent (BOE) Alaskan reserves, 1.1 million net exploration acres in Alaska, and a 22.3 percent interest in the Trans-Alaska pipeline.
  • Phillips Petroleum Co. expects to produce an average of 348,000 BOE per day this year from these assets, rising to 377,000 BOE per day in 2001.
  • BP Amoco is also selling ARCO's stake in pipelines and storage facilities related to the Cushing, Okla., crude oil hub to a Duke Energy subsidiary for $355 million.
  • The company has made an offer to buy the remaining shares in Vastar Resources Inc. for approximately $1.25 billion.
  • The Federal Trade Commission has suspended its federal court proceedings against the $34 billion merger in expectation of the sale announcement.

Statistics:

  • $7 billion: The sale price of ARCO's Alaskan assets to Phillips Petroleum Co.
  • 1.9 billion barrels: The number of equivalent oil reserves being sold.
  • 1.1 million acres: The number of net exploration acres being sold in Alaska.
  • 22.3%: The interest in the Trans-Alaska pipeline being sold to Phillips Petroleum Co.
  • 348,000 BOE/day: The average daily production expected from the assets by Phillips Petroleum Co. this year.
  • 377,000 BOE/day: The expected average daily production from the assets by Phillips Petroleum Co. in 2001.
  • $355 million: The sale price of ARCO's pipeline and storage interests to a Duke Energy subsidiary.
  • $1.25 billion: The offer to buy the remaining shares in Vastar Resources Inc.
  • $34 billion: The total value of the proposed BP Amoco-ARCO merger.

Sources:

  • BP Amoco Plc
  • Atlantic Richfield Co. (ARCO)
  • Phillips Petroleum Co.
  • Duke Energy Corp.
  • Texas Eastern Products Pipeline Co. (TEPPCO)
  • Vastar Resources Inc.
  • Federal Trade Commission

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