Advertisement
YOU ARE HERE: LAT HomeCollections

CALIFORNIA

Occidental to Buy BP-Shell Oil Exploration Venture Altura

March 09, 2000|From Bloomberg News

Occidental Petroleum Corp. on Wednesday agreed to buy Altura Energy Ltd., a U.S. oil exploration joint venture of BP Amoco and Shell Oil Co., for $3.6 billion, part of a strategy of acquiring older U.S. fields and boosting their production.

Altura is the largest oil and natural-gas producer in the Permian Basin of western Texas and eastern New Mexico and has proven reserves of about 850 million barrels of oil and gas, though the fields' production is falling.

Westwood-based Occidental will develop reservoirs that BP Amoco and Shell have neglected, arresting Altura's decline within a year and keeping output steady for a decade or more, its executives said.

"They'll have this paid off in seven to 10 years, and then this will be a huge generator of cash," said Jay Wilson, an oil analyst at J.P. Morgan Securities.

Occidental would pay about $1.2 billion in cash and borrow $2.4 billion against Altura's assets to finance the transaction. Oxy, which makes chemicals as well as produces oil and natural gas, expects to complete the purchase next month.

Occidental shares fell 38 cents to close at $17.44 on the New York Stock Exchange on a day when crude oil prices fell 8.4% on the New York Mercantile Exchange.

London-based BP Amoco, which is buying L.A.-based Atlantic Richfield Co., owns 64% of Altura. Shell, the U.S. arm of Royal Dutch/Shell Group, holds the rest. They would retain a limited preferred interest in the partnership and issue $2 billion in long-term notes.

BP Amoco and Shell are selling Altura to better focus on finding large deposits in promising areas such as the deep waters of the Gulf of Mexico. Both companies have revenue several times Occidental's and can afford to drill in harsh environments where the big, undiscovered oil fields can still be found.

BP Amoco American depositary receipts, each representing six ordinary shares, rose $2.31 to close at $53 on the NYSE. U.S. shares of Royal Dutch Petroleum Co., the Netherlands-based holder of 60% of Royal Dutch/Shell, rose 31 cents to close at $55.56 on the NYSE.

Advertisement
Los Angeles Times Articles
|
|
|