Pacific Enterprises, the newly named conglomerate that owns Southern California Gas and Thrifty Drug, agreed Friday to buy a Texas oil and gas company for $339 million. It was the firm's second big oil acquisition announced this month.
The deal to buy Sabine Corp. of Dallas for $24 a share drove off another bidder, Presidio Oil Co., which wished the two companies well but said its $20-per-share offer was all Sabine is worth.
Pacific Enterprises refused to say whether it was invited to bid by Sabine as a "white knight." A spokesman said the Los Angeles-based firm approached Sabine last year and was told the company wasn't for sale. Presidio subsequently made its hostile bid.
Sabine owns oil and natural gas reserves totaling an equivalent of 32 million barrels of oil, most of it in Texas, Oklahoma and Kansas. The purchase also includes $55 million in cash and almost 4 million acres of mineral and leasehold acreage.
Pacific Enterprises said it will begin a cash tender offer for Sabine's shares. The offer is subject to about 70% of the shares being tendered, though that requirement can be modified, the firm said. Sabine's board unanimously approved the deal, and management and directors said they will tender all their shares.
Pacific Enterprises was called Pacific Lighting Corp. until last month, when its name was changed to reflect its diversification. The firm bought Thrifty Drug and its Big 5 sporting goods chain in 1986, and has been building up a long-established oil and gas unit.
Earlier this month, the company bought nearly 7 million barrels of proved reserves and some mineral prospects under the Burnett Ranch in King County, Tex., for $93 million. Its Big 5 unit this month bought the 21-store Dave Cook Sporting Goods chain of Denver for an undisclosed price.
John Curti, who follows Pacific Enterprises for Birr, Wilson & Co., in San Francisco, estimated that the company was paying $5 to $6 per barrel for the Sabine reserves, which he described as "fairly reasonable." The decline in oil prices, meanwhile, has made many oil fields a good buy.
The company said the holdings will increase its total reserves by 36%, while most of the undeveloped acreage is near current oil and gas properties owned by Pacific Enterprise Oil & Gas, the firm's oil exploration and production arm.
"It should provide the unit with many years of excellent drilling opportunities," Chairman Paul A. Miller said.
Wall Street was unenthusiastic, though Curti said Friday's $1.75-per-share drop in Pacific Enterprise stock to $46 a share partly reflected a weak showing by utilities and the stock market. Sabine shares, however, surged by $3.375 to $23.375 a share.
Sabine has been unprofitable since oil prices tumbled at the end of 1985. The company last year lost $7.5 million or 50 cents a share of revenue of $69 million, as weaker prices for natural gas offset the modest recovery in oil prices.