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Vintage Petroleum, Inc. (VPI) Message Board

  • danwilson_Yorkshire danwilson_Yorkshire Apr 3, 2000 4:55 PM Flag

    Quick look at APA / UPR merger

    As announced today on CNNfn:
    http://www.cnnfn.com/2000/04/03/deals/anadarko/

    First let me point out an error in the article above.
    It says the combined company will have "proved
    reserves" of 2 billion barrels of oil and 11.7 trillion
    cubic feet of natural gas. Those numbers are about
    double what the two companies reported to the SEC as
    their proven reserves as of 12/31/99. My guess is that
    the reporter has included "probable reserves" in
    these totals. (This shows how conservative the FAS-69
    calculation is.)

    Regardless, the new combined company
    looks good. Here's my calculation:

    a) Fully
    diluted shares after the merger (APC 128 + (UPR's 249 x
    0.455))= 241 million
    b) APC's share price today =
    $34.50
    c) Market Value of Equity (a + b) = $8,315
    million
    d) Long-Term Debt as of 12/31/99 = $4,240
    e)
    Total Market Cap. = $12,555 million

    Proven
    Reserves as reported by APC and UPR as of 12/31/99:
    f)
    Oil = 1,268 MMBBLS
    g) Gas = 5,798 BCF
    h) Total
    Proven Reserves (f + 6g) = 2,234 MMBOE

    Market Cap
    per BOE of Proven Reserves (e / h) =
    $5.62

    NOTE: The peer group average is $7.90/BOE

    Other
    information:
    The combined Net Present Value of Proven Reserves
    (FAS-69) reported to the SEC by the companies as of
    12/31/99 was $9,041 million. The FAS-69 calculation is
    conservative and started with NYMEX prices of about $25/oil
    and $2.30/gas.

    For the 4th quarter of 1999 the
    two companies reported combined average daily
    production of 477,583 BOEPD.

    The way to play this is
    to buy UPR. For each share of UPR you'll get 0.455
    shares of APC.

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