Houston Exploration emphasized that it is unable to predict if this review of alternatives will result in any transaction or otherwise modify or replace the Company's current business plan. The Company does not expect to make further public comments with respect to this announcement until after the Board of Directors has completed its analysis of strategic alternatives and approved a definitive course of action.
Houston Exploration issued the following statement:
Since announcing our restructuring plan in the fall of 2005, decisive actions have been taken to improve the Company's financial and operating performance. We have completed the sale of our offshore assets and are now focused onshore where the Company has a proven track record of more stable and predictable production and reserve growth -- in fact, we currently estimate onshore production to grow by approximately 9 percent this year and 19 percent in 2007. With the Company's portfolio successfully realigned, the Board believes that now is an appropriate time to explore additional strategic alternatives that may be available to further enhance shareholder value.
Houston Exploration also announced that its Board of Directors, after careful examination, unanimously determined that the unsolicited acquisition proposal from JANA Partners is not in the best interest of Houston Exploration shareholders. Following is a letter sent today from William G. Hargett, Chairman, President and Chief Executive Officer of Houston Exploration, to Barry Rosenstein, Managing Partner of JANA Partners:
Dear Mr. Rosenstein:
As you know, in November 2005 and well before JANA disclosed its holdings in Houston Exploration, we announced a major restructuring plan designed to improve Houston Exploration's financial and operating performance. Pursuant to that plan, we have successfully completed the sale of our offshore assets and have begun executing a share repurchase program. We have been disciplined in our approach and believe that Houston Exploration is well-positioned for continued value creation:
While we have confidence in the Company's plan, the Houston Exploration Board is, and has always been, committed to pursuing the path that provides the greatest value to Houston Exploration shareholders. Consistent with this commitment, our Board has engaged Lehman Brothers Inc. to assist the Company in exploring strategic alternatives to further enhance shareholder value. These alternatives may complement or replace the continued execution of the Company's business plan and include, but are not limited to, a recapitalization of the Company either through additional share repurchases or a special dividend; operating partnerships and/or strategic alliances; and the sale or merger of Houston Exploration.
In sum, our Board and senior leadership team continue to be focused on fully realizing the value of Houston Exploration. Thank you for your interest in the Company.
Lehman Brothers Inc. is serving as financial advisor to Houston Exploration, and Akin Gump Strauss Hauer & Feld LLP and Morris, Nichols, Arsht & Tunnell LLP are legal advisors.
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