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Chevron/Texaco Buys Unocal

Discussion in 'News' started by villain, Apr 4, 2005.

  1. villain

    villain Veteran Member

    Joined: Jul 12, 2002 Messages: 5,190 Likes Received: 2
    Condoleeza Rice is in the money!

    Chevron Buys Unocal for $16.4 Billion
    By Jesus Sanchez
    Times Staff Writer

    10:00 AM PDT, April 4, 2005

    ChevronTexaco Corp. today agreed to buy El Segundo-based Unocal Corp. for $16.4 billion in stock and cash in a deal that ends months of speculation surrounding the nation's eighth-largest oil company.

    The agreement was reached after a long line of potential suitors — ranging from China National Offshore Oil Corp. to Royal Dutch/Shell Group to Italian oil giant Eni — had reportedly looked closely at Unocal, which is prized for its large petroleum and natural gas reserves in Asia, the Gulf of Mexico and the Caspian Sea.

    ChevronTexaco, the nation's second-largest energy company behind ExxonMobil, will gain Unocal's 1.75 billion barrels in proven oil reserves as well as the company's patent formula for cleaner burning gasoline sold in California.

    San Ramon, Calif.-based ChevronTexaco said the combination would result in $325 million a year in additional revenues and reduced costs.

    "It is an attractive transaction that provides value in both the near and long term," said ChevronTexaco Chairman Dave O'Reilly in a statement. "ChevronTexaco and Unocal share common roots in the oil fields of California and we believe we have highly compatible business cultures and values."

    ChevronTexaco's $16 billion offer is made up of 75% in company stock and 25% in cash — a combination valued at $62 a share. In addition, ChevronTexaco will also assume $1.6 billion in Unocal debt.

    The buyout bid disappointed Unocal shareholders, who were apparently expecting a higher offer. Unocal shares on the New York Stock Exchange slumped more than 7% in early afternoon trading. ChevronTexaco shares were down more than 3%.

    The acquisition will mean the end of one of Southern California's old line corporations. Unocal, once called Union Oil Co. of California, was founded in 1890 in Santa Paula in Ventura County.

    Known for its Union 76 brand, it was a major player in California's oil and gasoline markets until the mid-1990s, when the company sold the gasoline business and the last of its California oil fields to focus on exploration and production elsewhere, mainly overseas.

    About 65% of Unocal's oil and natural gas production -- which averaged the equivalent of 428,000 barrels of oil a day in the fourth quarter -- comes from foreign fields.

    "Over the past several years Unocal has been highly successful in building a portfolio of major international and deepwater assets and prospects," said Charles R. Williamson, Unocal chairman, in a statement. "The combination with ChevronTexaco will provide the financial and technical resources to maximize the potential of these assets and prospects."

    Last month, Unocal settled a landmark human rights lawsuit that accused the company of being responsible for forced labor, rapes and a murder allegedly carried out by soldiers along a natural gas pipeline route in Myanmar.

    Monetary terms of the settlement weren't made public.

    Times staff writers James F. Peltz and Marc Lifsher contributed to this story.