YOU ARE HERE: LAT HomeCollections

Occidental to Buy Hunt Oil, Gas Concern : Energy: Placid Oil controls reserves of about 17 million barrels of crude and 270 billion cubic feet of natural gas.

November 30, 1994|From Staff and Wire Reports

Occidental Petroleum Corp. said Tuesday that it has agreed to buy an oil and gas operation of the Hunt family trusts--Placid Oil Co.--for about $250 million in stock in a move to augment Occidental's Gulf Coast operations.

The stock consists of $175 million in Occidental preferred stock, with the balance in common stock.

Occidental Chairman Ray R. Irani said the Placid purchase would immediately add to the company's cash flow and earnings because "it adds profitable current production, especially in the Gulf Coast area, where we already have significant oil and gas operations."

Placid--operated by the Nelson, Herbert and Lamar Hunt family trusts--has exploration and production properties in the United States Gulf Coast, Canada and the Netherlands. Hunt Oil Co., controlled by Ray L. Hunt, is unaffected by the sale.

Occidental said the Placid properties have proved and probable reserves of about 17 million barrels of oil and 270 billion cubic feet of natural gas, about evenly split between North America and the Netherlands. During 1994, daily production from the Placid properties has averaged 6,000 barrels of oil and 100 million cubic feet of natural gas, Occidental said.

Occidental said the transaction is expected to be completed by year-end.

The sale of Placid Oil Co. follows the recent settlement of a three-year legal battle between two of the Hunt brothers and their creditors. The settlement marked the end of what had been the nation's largest personal bankruptcy case.

In the settlement, the family of William Herbert Hunt agreed in a court filing to hand over the bulk of his property--more than $40 million in real estate, with back interest, that creditors said he had fraudulently transferred shortly before filing for personal bankruptcy.

In August, 1994, Nelson Bunker Hunt's relatives agreed to a similar settlement, worth about $14 million.

The Hunts denied the allegations of fraud and said the settlements did not constitute an admission of guilt.

The Hunt brothers' corporations filed for bankruptcy eight years ago, two years before the brothers themselves filed for personal bankruptcy. Owing more than $1 billion, Nelson Bunker Hunt and William Herbert Hunt declared bankruptcy in September, 1988, after an alleged attempt to corner the world's silver market and after their investments in sugar, land and oil went sour, wiping out the fortune left them by their father, oil man H.L. Hunt.

The Hunts' Placid Oil Co. entered bankruptcy proceedings after defaulting on interest payments on a $705-million principal loan from banks in May, 1986, and August, 1986. The oil and gas company had buckled under the weight of a $1.2-billion loan that was used to pay the Hunts brothers' margin calls from the purchase of millions of ounces of silver. The loan was secured by Placid's domestic oil and gas reserves.

In July, 1988, Placid filed a joint debt reorganization plan with bank lenders on a 10-year plan to settle its debts.

Occidental shares slipped 12.5 cents Tuesday to $19.50 on the New York Stock Exchange.

Los Angeles Times Articles