Posted on 06/10/2008 6:27:19 PM PDT by shrinkermd
Oil and natural-gas producer XTO Energy Inc. said it will buy closely held Hunt Petroleum Corp. for $4.19 billion in cash and stock, in a deal that highlights the changing of the guard in the U.S. oil patch.
Hunt Petroleum, which traces its lineage to legendary wildcatter H.L. Hunt, is the largest in a series of private companies, many of them family-owned, that have sold to larger public companies in recent months. Large players are rushing to snap up assets in emerging oil and natural-gas fields, while small producers are seeking to cash in on holdings whose values have soared along with commodities prices.
...XTO has been especially active. Even before its latest deal, the Fort Worth, Texas, company had announced since April three deals valued at nearly $3 billion. In a conference call with investors Tuesday, Chief Executive Bob Simpson said he expects to do at least another $1 billion to $1.5 billion of deals this year. "XTO is sort of exploding right here," said Mr. Simpson
...The beneficiaries will reap a windfall from the sale. XTO will pay $2.6 billion in cash and about $1.6 billion in XTO common stock. XTO said the Hunt deal, which is expected to close by Sept. 3, along with its other recent acquisitions will increase its expected oil and gas production this year by 28% to 30% over earlier projections. The company expects to increase production by another 20% in 2009. XTO shares were down 1% to $67.02 in 4 p.m. trading on the New York Stock Exchange Tuesday.
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(Excerpt) Read more at online.wsj.com ...
Note, that growth is by acquisitions. 85% of known, new oil reserves are off limits, so the bidding goes on for those currently existing.
DALLAS (AP) — Heirs of famed Texas wildcatter H.L. Hunt, once among the richest men in America, are selling one of the last remaining pieces of his legacy, the Hunt Petroleum Corp., for $4.19 billion.
XTO Energy Inc. said Tuesday it is buying privately held Hunt Petroleum for cash and stock in a deal made more attractive by high oil and gas prices.
But the deal could become tangled in a money feud roiling the Hunt family. The lawyer for one of Hunt's great-grandsons, who is suing his own family over billions held in trust funds, vowed Tuesday to block the sale. He considers the price too low.
XTO said the deal includes $2.6 billion in cash and 23.5 million shares of XTO stock that were valued at about $1.6 billion, or $67.50 per XTO share.
XTO shares slipped 70 cents, or 1.03 percent, to close at $67.02 in trading Tuesday after rising to a 52-week high of $70.63 earlier in the session.
H.L. Hunt drilled his first well in 1921 in Arkansas, but made his fortune in the East Texas field discovered in 1930. He owned wells and a pipeline to deliver the oil. In 1950, he incorporated a company that later became Hunt Petroleum, according to the company's Web site.
Hunt Petroleum is not affiliated with Hunt Oil Co., which is owned by one of H.L. Hunt's sons and his family and also based in Dallas.
H.L. Hunt died in 1974, and his heirs are fighting over billions of dollars in trust fund assets.
In November, one of Hunt's great-grandsons sued his father and several other family members, claiming they conspired to exclude him from part of his inheritance because he opposed a plan to sell Hunt Petroleum.
The lawyer for great-grandson Albert Hill III vowed Tuesday to fight the sale, calling the price "a bargain-basement steal" for XTO.
"Why would anyone dump the company at this price in this market? Unbelievable," said Hill's lawyer, William Brewer. "This is exactly what we've been worried about.
Brewer said he could ask the judge handling the trust lawsuit to block the sale.
XTO Chairman and Chief Executive Bob R. Simpson said he believes the Hunt family wanted to sell the company before a new administration in 2009 could raise taxes on gains.
Hunt Petroleum officials did not immediately respond to phone calls and e-mail messages for comment.
Subash Chandra, an analyst with Jefferies & Co., said the deal was "attractively priced," but he said XTO got a better deal last month when it bought oil and gas property in Montana and North Dakota from privately held Headington Oil Co. of Dallas for $1.85 billion.
"They're paying a fair value of the producing assets" while getting land with potential for additional production, including worked-over fields in East Texas, "for free," Chandra said.
Fort Worth-based XTO said it would pay the $2.6 billion cash portion from cash flow and borrowing, although it gave few details about the borrowing.
Simpson said that at expected oil and gas prices, the Hunt properties' proved reserves of about 1 trillion cubic feet of natural gas equivalent should generate more than $1.2 billion in cash flow next year.
XTO raised its production growth target to up to 30 percent for 2008 and 20 percent for 2009 due to the acquisition of Hunt and properties from Headington. To hit those targets, the company figures to spend $4 billion to $4.5 billion on development that would use 110 to 120 drilling rigs.
Executives acknowledged rigs could be in short supply — $130 per barrel oil has increased drilling activity — but said they could bring in rigs from other areas.
The Hunt acquisition could add 197 million cubic feet of natural gas, 8,500 barrels of oil and 2,300 barrels of natural gas liquids to XTO's daily production, the company said.
About 70 percent of the properties are in east Texas, central and northern Louisiana. Most of the rest are along the Gulf Coast and in the Gulf of Mexico, with a small percentage in the North Sea.
XTO officials said the Hunt properties overlap with XTO's efforts to extract gas and oil from sand formations and carbonates. They said the Hunt assets would let XTO increase production in the east Texas and Louisiana region by 15 percent per year.
The acquisition is expected to close around Sept. 3, subject to antitrust clearance.
XTO produces oil and natural gas in Texas, Louisiana, New Mexico, Arkansas, Oklahoma, Kansas, Wyoming, Colorado, Alaska, Utah, Mississippi and Montana.
I’m not sure making major acquisitions makes much sense at this point in the price cycle.
The acquisitions that you get at bargain prices are when oil companies are in trouble with low oil and gas prices.
That is how Exxon snatched up Mobil, and BP snatched up Amoco and ARCO. There are other examples.
Go XTO Go. I need my checks.
Domestic oil and gas sector is so hot these days. Dittos for coal- James River and Patriot PCX, an offshoot of Peabody. But SQM is very interesting and Fredrickson’s SDRL and FRO
I am not a fan of XTO, I have done work for them.
Your right, strange to buy at this markert price.
I didn’t see just which Hunt company, XTO is buying.
Oh no, there's that word again.
I am pretty sure it was Hunt Petroleum. I’ve been getting a lot of paperwork at the office regarding consents to assign, etc.
Who does? They get to assign chance factors to their recommendations.
Try doing that as to whether title is good for drilling.
"Hey boss, there's a 40% chance that we'll have title failure to our lease, but the geologist only gives the prospect a 20% chance of success, so let's do it!"
Fired.
Hunt Oil, run by Ray L. Hunt, is much bigger and more significant than Hunt Petroleum, owned by the heirs of Hassie Hunt and Margaret Hunt Hill, or so I thought.
Hunt Oil has the Camisea natural gas in the Peruvian Amazon and has also made deals with the Iraqi Kurds.
All they will have to do is decrease production, raise retail prices and move their business off shore somewhere. that way, congress gets no tax money,( because big oil ain't stupid ) and somewhere like China or austrailia gets lots of oil.
I just have this feeling that the oil retailers jacked the prices as soon as they saw the "Obama,Hillary or McCain global warming train" and the coming tax train wreck headed their way...... they probably figured " we better just max out the price of fuel product before congress reaps all the profit instead" since the economy will be screwed either way anyway
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