Bellweather to Acquire Bargo Energy Co.
Bellwether Exploration Company (NASDAQ NASDAQ
in full National Association of Securities Dealers Automated Quotations
U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BELW), Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation).
Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , has signed an agreement to acquire Bargo Energy Company (OTC OTC
See over-the-counter market (OTC). :BARG BARG Barnacle Goose (bird species)
BARG Billing and Accounting Roaming Group (GSM Association)
BARG Big Ass Robot Gods (comic book series)
BARG British Amateur Robotics Group ) in a cash and stock transaction which has been approved by each company's board of directors. Under the agreement, Bellwether will provide to Bargo common shareholders and option holders approximately $60 million in cash and $80 million in Bellwether stock for an implied consideration of $1.26 per fully diluted share. The number of shares will be determined by Bellwether's 20 day trading Day trading
Establishing and liquidating the same position or positions within one day's trading. average 3 days prior to closing and will be subject to a price collar. On this basis, Bargo shareholders will receive at least 8.9 million Bellwether shares and no more than 11.4 million Bellwether shares.
The transaction is structured to be tax free with respect to the Bellwether common stock issued to Bargo common shareholders. The transaction also includes the assumption of Bargo's liabilities and the redemption of Bargo's preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders.
Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. for $50 million in cash plus accrued dividends. Based on projected year end 2000 numbers, the value of this acquisition is approximately $240 million. At Bellwether's January 24, 2001 closing price of $9.22, Bellwether shareholders would own approximately 62% of the combined company and Bargo shareholders would own approximately 38%.
The new company will have a total pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts.
The phrase pro forma market enterprise value of approximately $500 million. The company anticipates arranging new credit facilities credit facilities npl → facilidades fpl de crédito
credit facilities npl → facilités fpl de paiement
credit facilities to provide funding for the merger.
Shareholder meetings and subsequent closing is expected in early Spring 2001. A new name for the combined company is being developed, and will be disclosed shortly. The company will be headquartered in Houston, Texas.
On a pro forma basis, the combination is anticipated to do the following:
-- More than double Bellwether's proved reserve base to approximately 80 MMBOE MMBOE Million Barrels of Oil Equivalent (energy and petroleum industry) (65% oil)
-- Nearly double Bellwether's daily production exit rate to approximately 25 MBOE MBOE Thousands of Barrels of Oil Equivalent
MBOE Milford Board of Education per day (60% oil)
-- Add quality reserves at an attractive cost of less than $5 per proved BOE BOE Based on Experience
BOE Board of Education
BOE Boletín Oficial del Estado (Spanish)
BOE Bank of England
BOE Board of Equalization
BOE Board of Elections
BOE Barrel of Oil Equivalent
BOE Bind on Equip
-- Be immediately accretive to both earnings and cash flow per share
-- Lengthen Bellwether's reserve life from approximately 6 to 9 years
-- Increase the percentage of operated properties from approximately 40% to 50%
-- Capture significant annual cost savings through the combination of the two companies
-- Provide a platform for further consolidation in the combined company's key operating areas, which will be the Permian Basin and the onshore / offshore Gulf Coast regions
-- Strengthen Bellwether's executive management team
Management and Board
Doug Manner, Bellwether's current president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , will remain CEO and become the new chairman of the board. Jonathan Clarkson, the current president of Bargo, who has over 25years of experience, both as a banker and financial executive in the independent energy sector, will become the company's new president and CFO See Chief Financial Officer. . The company will restructure its board to include four representatives from Bellwether and three from Bargo. J.P. Bryan and Tim J. Goff, the previous chairmen of Bellwether and Bargo, respectively, will retain seats on the new board.
Pro Forma Summary of Core Area Properties
Permian Basin (34% of reserves)
-- Long-life production, primarily oil
-- Mostly operated by majors or large independents
-- Waterfloods with long-term C02 potential for increased oil recovery
-- New Mexico gas production with exploration potential
Gulf Coast C 24% of reserves)
-- Approximately 67% gas, 33% oil production
-- Upside potential Upside potential
The amount by which analysts or investors expect the price of a security may increase.
The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar in structural and stratigraphic stra·tig·ra·phy
The study of rock strata, especially the distribution, deposition, and age of sedimentary rocks.
strat gas plays
-- Upside oil potential in large field previously operated by a major
-- Significant inventory of exploration and exploitation prospects
Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico
Golfo de Mexico
Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east (8% of reserves)
-- High rate gas production
-- Focus of Bellwether exploration program
East Texas (14% of reserves)
-- Operated oil production, primarily from East Texas oil field
-- Properties purchased from Arco and Texaco
-- Optimization potential on previous Texaco properties
Ecuador (10% of reserves)
-- Oil production with significant exploitation upside
-- Exploration upside
Doug Manner commented, "This combination meets Bellwether's criteria of a strategic fit for the company. It significantly increases the company's position in the Permian Basin and Gulf Coast area where Bellwether Exploration has historically achieved high rates of return, and it should enable the company to capture additional opportunities as well as cost savings." Manner further stated, "The increased cash flow from the combination is expected to enable the company to better fund its growing portfolio of development opportunities. We are obviously quite enthused about the potential value that will be created for our shareholders by the transaction. We are also quite pleased to welcome certain key Bargo Energy employees to the company."
Jonathan Clarkson stated, "We expect the combined companies to provide the critical mass and offer the financial flexibility that will allow us to exploit a large inventory of exploitation and development projects. The stronger prospect inventory and technical talent will enable the combined companies to deliver enhanced shareholder return." He further added, "When I joined the Bargo team in 1999, the focus was on increasing value and liquidity for our shareholders by assembling and exploiting a large reserve base. This transaction with Bellwether, along with a successful divestiture program in the second half of 2000, fulfills our commitment to Bargo's shareholders by providing them with an immediate cash return on their investment, plus providing them with longer term upside potential with their continued ownership in the new company."
Johnson Rice & Company, L.L.C. is serving as the financial advisor to Bellwether and provided a fairness opinion Fairness Opinion
A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition.
A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. for this transaction to Bellwether. Lehman Brothers Inc. and J.P. Morgan Chase and Co. are serving as financial advisors to Bargo. J.P. Morgan Chase and Co. provided a fairness opinion to Bargo's Board of Directors.
Bellwether Exploration Company is an independent oil and gas exploration and production company headquartered in Houston, Texas with oil and gas properties located in three core areas: the Gulf of Mexico both onshore and offshore, Southeast New Mexico/West Texas and Ecuador. Bargo Energy Company is a domestic oil and gas production, exploitation and acquisition firm headquartered in Houston, Texas with oil and gas properties located in the Permian Basin, Gulf Coast and East Texas.