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.