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Arco Agrees to Sale of Its Alaskan Assets

Antitrust: Deal removes a hurdle in proposed buyout by BP Amoco. FTC will seek to postpone its suit to block acquisition.

March 16, 2000|From Times Wire Services

ANCHORAGE — Atlantic Richfield Co. agreed Wednesday to sell its Alaskan oil fields to Phillips Petroleum Co., and with that apparent hurdle overcome, federal antitrust regulators moved to postpone their lawsuit blocking Arco's buyout by BP Amoco.

Los Angeles-based Arco was a pioneer in Alaskan oil exploration, and the sale of its fields and other assets could be worth up to $7 billion.

The announcement, which was expected, prompted the U.S. Federal Trade Commission to seek postponement of hearings starting Monday on its suit to stop the $27-billion BP Amoco-Arco deal.

The FTC suit alleges that BP Amoco and Arco's combined ownership of about 70% of Alaskan North Slope production would hurt competition and boost oil and gasoline prices on the West Coast.

Alaska supplies about 40% of the crude oil used by refineries on the West Coast, where gasoline prices are the highest in the country.

In a joint statement, BP Amoco Chief Executive John Browne and Arco Chairman Mike Bowlin said: "After months of uncertainty for staff and customers of BP Amoco and Arco, and the states and communities where we operate, we are pleased to be in discussions with the FTC."

London-based BP Amoco, the world's third-largest publicly traded oil company, had agreed to buy Arco, No. 7 in the U.S., on April 1.

The executives added that the sale "greatly advances" the chances for a resolution with antitrust regulators.

Even with the divestiture of Alaskan assets, BP Amoco would gain Arco's U.S. refineries and gas stations, U.S. and Asian natural-gas reserves and four-fifths of the $1 billion in estimated cost-saving from the buyout.

"This will probably be enough" to win FTC approval, said Peter Hitchens, an oil analyst at Williams de Broe in London. Alaska "has been the major hurdle that the FTC has been worried about."

"In light of the substantial and constructive proposals made by the defendants, all parties have agreed to seek adjournment of the federal court proceedings in FTC vs. BP Amoco and Atlantic Richfield Co. in order to conduct negotiations," Richard Parker, director of the FTC's Bureau of Competition, said in a statement.

A delay in the trial, to be held in U.S. District Court in San Francisco, gives the commission time to evaluate Bartlesville, Okla.-based Phillips. The FTC must decide whether the company, No. 6 in the U.S., has the financial strength to make investments to maintain production and be a successful competitor for BP Amoco, sources familiar with the agency's plans said.

The Alaskan assets that Phillips is buying include a 22% stake in a Prudhoe Bay oil field and 43% of a natural-gas reserve there.

Phillips will also receive a 78% stake in the Alpine field, 1.1 million exploration acres and a 22% interest in the trans-Alaska pipeline, the 800-mile link that makes it possible to ship oil from the frozen, harsh terrain of the Alaskan fields.

In New York Stock Exchange composite trading, Arco shares rose $4.25 to close at $83.25; BP Amoco's American depositary receipts, each representing six ordinary shares, rose $1.63 to $52.75; and Phillips shares rose 56 cents to $40.

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STATE GAS TAX

Assembly Republicans seek to eliminate the state's 8% gasoline tax, arguing that consumers need relief at the pump. A3

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