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OBITUARIES : Edfred L. Shannon Jr., 1926 - 2008

Oilman sold firm to Kuwaiti government

September 27, 2008|Jon Thurber | Times Staff Writer

Edfred L. Shannon Jr., the longtime former chief executive of the oil-drilling firm Santa Fe International who made headlines in the 1980s when he brokered the sale of his company to a petroleum firm owned by the Kuwaiti government, died Sunday at his home in Whittier. He was 82.

A statement from his family said that he had recently been hospitalized in Whittier but had returned home a few days before his death. The exact cause was not reported.

Under Shannon's leadership, Santa Fe International grew from a small Santa Fe Springs-based oil drilling contractor recording steady and sustained growth. By 1980, it had revenues of $1.2 billion, and a year later the Kuwaiti government, through its Kuwait Petroleum Corp., bought the company for $2.5 billion.

At the time, it was the largest merger in U.S business history. The deal initially raised concerns about the sale of a valuable American firm to a foreign government. National security issues were cited on several levels, including the fact that one of Santa Fe's subsidiaries, Alhambra-based engineering firm C.F. Braun and Co., had designed nuclear plants around the country. But the deal quickly passed congressional scrutiny.

For The Record
Los Angeles Times Wednesday, October 01, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 51 words Type of Material: Correction
Edfred L. Shannon Jr. obituary: The obituary of Edfred L. Shannon Jr. in Saturday's California section said his father was a professor at Oklahoma State College in Stillwater. The school was called Oklahoma A&M at the time Shannon's father taught there. The name was changed in 1957 to Oklahoma State University.

Shannon stayed on with the firm after the sale, serving as chairman and chief executive until his retirement in the early 1990s.

Shannon was born in Durant, Okla., on June 30, 1926. His father was a professor at what was then Oklahoma State College in Stillwater. The family moved to Morehead, Ky., when Shannon was in his late teens and he met his future wife, Ruth L. Boggs, at a basketball tournament there.

Enlisting in the Army on his 18th birthday, Shannon served with the first group of U.S. occupation troops in Japan in 1945. After his discharge two years later, he returned to Kentucky, married Boggs and headed to UC Berkeley, where he enrolled in a petroleum engineering curriculum.

After graduating in 1951, he landed a job with Union Oil Co. in Santa Fe Springs. Two years later he was recruited to join Santa Fe Drilling Co., which had once been a part of Union Oil. When Union decided to get out of the drilling business, the unit was purchased by a large group of members of the unit with a $250,000 investment.

Shannon's assignments in the 1950s relocated him to Australia, Peru and Venezuela. He worked as a drilling foreman, superintendent, general manager and eventually president of the subsidiaries in some of those countries. When he came back to the United States, he was named vice president for Western Hemisphere operations in 1960, and two years later, he was named Santa Fe's chief executive. The firm expanded its operations to Britain, Africa, China and the Middle East.

In most of the Middle East nations that Shannon dealt with, the oil operations were part of the government, which was helpful in making his deal with the Kuwaitis.

In interviews with the New York Times and Forbes magazine, Shannon described how the deal came about.

In July 1981, Shannon met with Sheikh Ali Khalifa Al Sabah, chairman of Kuwait Petroleum and the country's oil minister, to talk about another joint venture.

The transaction developed "in a conversation where [the Kuwaitis] said they were interested in a minority interest in our company," Shannon said, adding that it was his suggestion that they buy the whole company.

"They were willing to take a chance on us as managers," Shannon said, "because they knew us so well."

At $51 a share, which was more than twice the market price of the stock, the deal was approved overwhelmingly by the firm's shareholders.

But a few years later the Securities and Exchange Commission sued 22 people for securities fraud in an insider trading case. They included one former Santa Fe board member, executives of the firm and some of their neighbors, business partners and in-laws. Several were also convicted of criminal charges. Shannon, who was not involved in the probe, was dismayed and furious at those who were involved.

Outside the business arena, Shannon and his wife were active on the boards of many Southern California charitable organizations, including the Boy Scouts of America, Whittier College, the Huntington Library, the Autry National Center, the Rose Hills Foundation and the Presbyterian Intercommunity Hospital Foundation.

In addition to his wife of 61 years, he is survived by two sons, Michael and Bruce; a daughter, Cathryn; eight grandchildren; and two great-grandchildren.

A celebration of Shannon's life will be held at 11 a.m. Oct. 18 at SkyRose Chapel at Rose Hills Memorial Park in Whittier.

Instead of flowers, contributions may be made to the Presbyterian Intercommunity Hospital Foundation, 12401 Washington Ave., Whittier, CA 90602 or L.A. CADA (Centers for Alcohol and Drug Abuse), 11015 Bloomfield Ave., Santa Fe Springs, CA 90670 or the charity of your choice in the memory of Edfred L. Shannon Jr.


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