Phillips Petroleum Co. Acquires Arco Alaska Inc. in $7 Billion Deal

Strategic Insights -

Phillips Petroleum Co. has officially acquired Arco Alaska Inc. in a deal valued at approximately $7 billion. The acquisition makes Phillips the largest oil and gas producer in Alaska and the state's fifth largest employer. Kevin Meyers, the former president of Arco Alaska Inc., will remain at the helm of the newly formed Phillips Alaska Inc. as president and CEO.

Key Takeaways:

  • The acquisition is one of the final steps in the turbulent period for Alaska's oil industry, which began when BP Amoco announced plans to buy Atlantic Richfield Co. for $25 billion 13 months ago.
  • The deal marks a milestone in the consolidation of the industry, with plans for one company to manage the Prudhoe Bay oil field on the North Slope, potentially leading to layoffs.
  • The company hopes to minimize job losses by offering severance packages to employees who opt to leave, with an estimated number of affected employees unknown.
  • Some BP employees may shift to other positions or relocate out of state as a result of the takeover.
  • Approximately 5 of the top 50 management positions will be filled by Phillips employees who will relocate to Alaska within the next 6 months.
  • Kevin Meyers, widely admired for his leadership skills and love of Alaska, will head the new company, with no changes expected in senior management beyond his appointment.

Statistics:

  • The deal is valued at approximately $7 billion.
  • The acquisition makes Phillips the largest oil and gas producer in Alaska and the state's fifth largest employer.
  • Phillips has announced plans to take over the Prudhoe Bay oil field, with the takeover scheduled for July 1.
  • Approximately 5 of the top 50 management positions will be filled by Phillips employees who will relocate to Alaska within the next 6 months.

Sources:

  • Ben Spiess, AP, "Phillips takes over Arco Alaska's operations" (ANCC, 2000)