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Petroleum

Burlington Resources and Poco Petroleums to Combine Businesses, Creating Leading Independent Exploration and Production Company

Strategic Insights

— 2 min read

The merger of Burlington Resources Inc. and Poco Petroleums Ltd. will create a leading independent exploration and production company with a strong North American natural gas focus. The combined company will become one of the top four natural gas producers in North America, with a major presence in Western Canada. The transaction, valued at approximately US$2.5 billion, will be immediately accretive to earnings, cash flow, and net asset value per share in 1999 and beyond.

Key Takeaways:

  • The combined company will have proved reserves of approximately 10 trillion cubic feet equivalent (TCFE), making it the largest independent E&P company in North America.
  • The merger will create a leading independent exploration and production company with a strong North American natural gas focus.
  • The combined company will have a global asset base, financial resources, opportunity mix, and technical talent that will further strengthen BR's leadership position among independent E&P companies worldwide.
  • The transaction is expected to be immediately accretive to earnings, cash flow, and net asset value per share in 1999 and beyond.
  • The combined company will have a significant presence in Calgary, with substantially all management, staff, and operational employees of Poco expected to become part of the combined enterprise.
  • The Exchangeable Shares will have the same voting rights, dividend entitlements, and other attributes of BR common shares and will be exchangeable, at each shareholder's option, for BR common shares.
  • The merger was unanimously approved by the Boards of Directors of both companies, and the directors and officers of Poco have agreed to vote their shares in favor of the transaction.
  • BR currently has no assets north of the U.S.-Canadian border, and there is virtually no overlap between the two companies' operations.

Statistics:

  • The transaction is valued at approximately US$2.5 billion.
  • The combined company will have proved reserves of approximately 10 TCFE.
  • The combined company will have a total worldwide reserves of 9.9 trillion cubic feet equivalent as of December 31, 1998.
  • Combined 1998 worldwide gas production was 2.1 billion cubic feet per day.
  • Oil production was approximately 106 thousand barrels per day.
  • The total net worldwide acreage position was 21.4 million acres, with 3.6 million acres in Canada.
  • Operating cash flow was approximately US$1.1 billion (C$1.6 billion).
  • The combined company's global asset base, financial resources, opportunity mix, and technical talent will further strengthen BR's leadership position among independent E&P companies worldwide.
  • The merger will create a combined enterprise with the size and scope, operating skills, and financial resources to more aggressively pursue growth opportunities in Canada, the United States, and around the globe.

Sources:

  • Burlington Resources Inc. press release, August 16, 1999.
  • Poco Petroleums Ltd. press release, August 16, 1999.
  • "Burlington Resources to Acquire Poco Petroleums in US$2.5 Billion Transaction" by PR Newswire, August 16, 1999.

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