Belco Oil & Gas And Westport Rescources Agree To Merge
Belco Oil & Gas Corp. announced that it has entered into a definitive merger agreement with Westport Resources Corporation in a transaction valued at approximately $922 million, including the assumption of debt, fair market value of hedge portfolio and convertible preferred stock valued in the aggregate at approximately $588 million.
The merger agreement, which has been approved by both companies' Boards of Directors, provides for Belco shareholders to receive .4125 shares of Westport for each share of Belco in a tax-free business combination. Belco's existing 6 1/2% Convertible Preferred Stock will remain outstanding and the existing conversion ratio will be adjusted by a factor of .4125. The merger will be accounted for as a purchase transaction and the surviving corporation will follow the successful efforts method of accounting for its oil and gas activities.
Following the completion of the transaction Robert A. Belfer, Belco's Chairman and CEO, and Laurence D. Belfer, Belco's Vice Chairman, are expected to join Westport's Board of Directors. Donald D. Wolf, Westport's Chairman and CEO, will be Chairman and CEO of the combined company. Westport plans to maintain Belco's primary operating office in Dallas, Texas as its principal office for Mid Continent, Permian Basin and onshore Gulf Coast exploration and production activities. Grant W. Henderson, Belco's President and COO, is expected to join Westport's management team and will be responsible for managing the Dallas office along with the assumption of other Westport corporate responsibilities.
The oil and gas assets and operations of Belco and Westport are an excellent geographic fit with a strong combined presence in the Rocky Mountain region and good strategic overlap in the Mid-Continent, Permian Basin and Gulf Coast regions. In addition, the companies expect to generate significant synergies and economies of scale in this transaction. Based upon reported December 31, 2000 estimates, the combined company will have approximately 1.2 trillion cubic feet equivalent of proved reserves with a gas/oil mix of 52%/48%, respectively. Combined first quarter 2001 production was approximately 346 million cubic feet equivalent per day. Using these parameters the combined company will rank among the 20 largest independent E&P companies in the United States.