Plains Resources reports two large shareholders-Kayne Anderson Capital Advisors and EnCap Investments-will vote for the Vulcan Capital et al. buyout bid.
Vulcan, an investment fund controlled by Microsoft Corp. co-founder Paul Allen, is offering $16.75 per share of Plains, all cash. Partners in the bid are Jim Flores, Plains chairman, and John Raymond, president and chief executive.
A special Plains bid-evaluation committee has rejected an alternative offer of cash and new Plains securities by Pershing Square and Leucadia National Corp.
The offer was estimated by Pershing as valued at $17.60 per share, including $3 of cash per share of Plains, but the committee said the new Plains stock would have an "uncertain trading value."
Kayne Anderson holds 7.4% of Plains shares, and EnCap Investments holds 4.9%.
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Rod Erskine, El Paso's former head of E&P, has joined the board of Canadian Superior Energy Inc., Calgary (Amex, Toronto: SNG).
Erskine is chairman and co-founder of privately held start-up Erskine Energy LLC, which is focusing on U.S. Gulf Coast and Rocky Mountain gas basins. Previously, he was president of El Paso Production Co.; president of Coastal Oil & Gas Corp.; president and chief operating officer of Nerco Oil & Gas, an energy subsidiary of Pacific Corp.; vice president and general manager of Union Texas Petroleum; and with Unocal.
Greg Noval, president and chief executive of Canadian Superior, says, "Rod is a first-class explorationist and has been responsible for turning several companies into world-class exploration and production companies. His breath of experience and wisdom in the oil and gas industry in North America is a welcome addition to our board."
Canadian Superior operates in western Canada, offshore Nova Scotia and offshore Trinidad.
Shares of El Paso Corp. (NYSE: EP) dropped on news that the company was slashing its proved reserve estimate 41% and would take a $1 billion impairment charge. Analysts questioned whether the company will be forced to sell any of its core assets to support its balance sheet, and how it will be able to attract the third-party capital it desires to bolster its slim E&P spending plan this year.
"The level of this impairment is simply unprecedented," says Gordon Howald, an analyst with Credit Lyonnais Securities. El Paso sliced 1.8 trillion cubic feet of gas equivalent off its proved reserve inventory, leaving it with 2.6 Tcfe, following an independent audit by Ryder Scott-a firm with a reputation for conservative evaluations.
XTO Energy Inc., Fort Worth, (NYSE: XTO) plans to buy producing properties primarily in the Barnett Shale region of North Texas and in the Arkoma Basin from various parties for $200 million.
Proved reserves are estimated at about 154 billion cubic feet of gas equivalent (Bcfe) of which approximately 52% are proved developed. Production is 25 million cubic feet of gas equivalent (MMcfe) per day, net (99% gas; 88% operated).
Development costs for the proved undeveloped reserves are estimated at $0.64 per thousand cubic feet (Mcf). The deal will be XTO's entry to the Barnett Shale region
"Our technical teams have been assessing the long-term viability of the Barnett Shale for the past two years-scrutinizing wellbore and reservoir dynamics along with economic feasibility," says Steffen E. Palko, XTO vice chairman and president. "Given the conclusions, our development teams are enthusiastic and committed."
In the Barnett Shale, XTO is acquiring 97.6 Bcfe of proved reserves (42% developed) for $120 million. Current daily production is approximately 15 MMcfe. Some 11,000 acres are involved.
In the Arkoma Basin, XTO is buying 56.3 Bcfe of long-lived proved reserves (70% developed) for $80 million. The properties produce about 10 MMcfe per day.
Most of the deals will close by April 15. Funding will be through existing credit facilities and from cash on hand.
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