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EXHIBIT 99.1
[LOGO]
POGO PRODUCING COMPANY TO ACQUIRE NORTH CENTRAL
OIL CORPORATION IN $750 MILLION TRANSACTION
Houston, TX, November 20, 2000 - Pogo Producing Company (NYSE: PPP) ("Pogo")
today announced that its board of directors has approved a definitive merger
agreement to acquire NORIC Corporation, the parent corporation of North Central
Oil Corporation ("North Central") for approximately $630 million in cash and
Pogo common stock. Pogo will also assume approximately $120 million of North
Central's net debt. The combined company will have an equity value of
approximately $1.3 billion and a total enterprise value of approximately $2.2
billion.
The transaction will be accounted for as a purchase and is expected to be
immediately accretive to earnings, cash flow, reserves and production per share.
Pogo anticipates that the transaction can be completed in the first quarter of
2001.
Under the agreement, NORIC shareholders will receive approximately $630 million
in a combination of 50% cash and 50% Pogo common stock, subject to a collar.
The transaction is expected to be tax free to Pogo and tax free to NORIC
shareholders to the extent they receive Pogo common stock.
On a pro forma basis, the merger is anticipated to:
. Increase Pogo's total proved oil and gas reserves by 63% from 847.4
Billion cubic feet of natural gas equivalent ("Bcfe") consisting of
44% gas and 56% oil as of year-end 1999 to 1,379.7 Bcfe consisting of
61% gas and 39% oil
. Increase Pogo's projected annual 2000 production by 35% from 122 Bcfe
to 165 Bcfe
. Complement Pogo's already attractive reserve and production mix with
North Central's quality North American natural gas assets
. Extend Pogo's current indicated reserve life by 20% to 8.3 years
Paul G. Van Wagenen, chairman, president and chief executive officer of Pogo,
said, "Pogo has had a record year in terms of both revenues and production. Now,
through our exciting combination with North Central, we can look forward to
building on these successes in the years ahead. This transaction will enable us
to achieve a number of key strategic objectives going forward, including the
significant enhancement of our long-lived North American natural gas position
and improved exploration and production potential in our core domestic operating
areas in and around the Gulf of Mexico. North Central has an unbroken 17-year
reserve replacement record, as well as a large inventory of operated properties,
high-impact potential prospects and attractive exploration acreage. We expect to
realize additional benefits from our increased production of natural gas, which
we believe will be the energy commodity of choice for the next several years."
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"We are excited about the tremendous upside potential this transaction creates
for our company, our shareholders and our employees alike. Our combination with
North Central will provide us with a highly concentrated property mix centered
in five core areas, augmenting our strong presence in the Gulf of Mexico and
Permian Basin areas and further diversifying our existing operations in Thailand
and Hungary with new properties in the Rocky Mountain region. Additionally, the
cash flow generated from our increased production will serve to fund Pogo's
sizable inventory of high-impact exploration projects. This transaction will
also result in a stronger financial position for the combined company, which
will allow us to more aggressively pursue future exploration, development and
acquisition opportunities," he continued.
"By matching North Central's operational strengths with our successful approach
to identifying, developing and producing from high-quality properties around the
world, we will realize a more profitable, cost-efficient structure for the
combined company. What's more, the addition of North Central's talented
employees, including several highly trained scientists and technicians, will
further enhance Pogo's first-rate team. The depth of skill sets created by this
combination will enable us to seize exciting high-growth opportunities around
the world," Mr. Van Wagenen concluded.
Proved Reserves. On a pro forma basis, total proved reserves will be
approximately 1.4 Tcfe reflecting Pogo's reserves of 847.4 Bcfe as of December
31, 1999 and North Central's reserves of 532.3 Bcfe as of June 30, 2000. The
combination will result in an improved geographic diversification of the new
company's reserve base. North Central's reserves, located exclusively in North
America, will be blended with Pogo's 56% domestic and 44% international
reserves. With the addition of North Central's reserves, which are comprised of
88% natural gas, Pogo's natural gas reserves will be more than doubled. The
resulting pro forma reserve mix will be 61% natural gas and 39% oil.
Exploration. Pogo's attractive core exploration regions that include the Gulf
of Mexico, offshore Thailand, the Permian Basin, Hungary, Canada, and the North
Sea are accentuated by North Central's significant onshore potential in the
South and East Texas, South Louisiana and Rocky Mountain areas. The Los Mogotes
and Hundido Fields, located in Zapata County, Texas, contain multiple Wilcox
horizons where significant reserve potential has been identified by analysis of
the existing 124 square miles of licensed 3-D seismic. In the Rocky Mountains,
the down-dip potential of the Madden Deep Unit is estimated to be extensive.
There are also over 140 identified exploration drilling locations to pursue in
the onshore and offshore Gulf Coast regions.
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Development. In Thailand, Pogo will continue to develop the Benchamas,
Tantawan, and Maliwan fields. The company is in the process of upgrading
facilities to handle the current prolific production and is also initiating
development of at least six additional platform areas. The offshore Gulf of
Mexico will require deep-water development of Pogo's Mississippi Canyon 661/705
and Ewing Banks 871/872 discoveries. In the Permian Basin, Pogo will continue
the highly successful development campaigns of dozens of fields with Brushy
Canyon and Morrow production. The companies' combined program will also include
100 development opportunities in South Texas. In the Shallow Madden Lower Fort
Union formation, there are over 50 development locations that have been
identified to pursue. Synergy of operations will result from North Central's
Main Pass 10 development with Pogo's forthcoming development of significant
discoveries in Main Pass 76 and Main Pass 61/62.
Discretionary Cash Flow. In 1999, Pogo and North Central generated a combined
$132.5 million of discretionary cash flow. Given the rising production profiles
of both companies and expectations for continued improvement in commodity
prices, pro forma discretionary cash flow is projected to increase by 185% to
$378 million in 2000. Pogo plans to hedge a significant portion of North
Central's gas volumes through at least 2002 to take advantage of the strong
North American natural gas market.
Under the terms of the agreement, NORIC's shareholders will receive
approximately $315 million of Pogo common shares so long as the average closing
price of Pogo stock during the 20-day trading period ending on the fifth trading
day prior to the merger closing is between $22.25 and $27.25. If the average
closing price is less than $22.25, the number of Pogo common shares to be issued
will be approximately 14.2 million. If the average closing price is greater
than $27.25, the number of Pogo common shares to be issued will be approximately
11.6 million.
Pogo intends to finance the cash portion of the acquisition through a
combination of cash on hand and a new bank revolving credit facility.
Pogo expects the transaction to result in general and administrative cost
efficiencies of approximately 40%. Savings are expected to come from the
elimination of duplicative activities, improved operating efficiencies and the
combination of the companies' work forces.
The combined company, to be called Pogo Producing Company, will be headquartered
in Houston, TX. Upon closure of the transaction, Paul G. Van Wagenen will
remain as chairman, president and chief executive officer of the combined
company.
The transaction is conditioned upon, among other things, the approval of the
stockholders of both companies and customary regulatory approvals.
Merrill Lynch & Co. acted as financial advisor and provided a fairness opinion
to Pogo, and Baker Botts LLP acted as Pogo's legal advisors. Goldman, Sachs &
Co. served as financial advisor to NORIC and North Central and Shearman &
Sterling served as legal advisors.
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About North Central Oil Corporation
North Central is an independent oil and gas exploration and production company
headquartered in Houston, TX with properties concentrated in four core areas:
South Texas, the Rocky Mountains, South Louisiana and the Texas Gulf Coast.
About Pogo Producing Company
Pogo Producing Company explores for, develops and produces oil and natural gas.
Headquartered in Houston, Pogo owns various ownership interests in 106 federal
and state Gulf of Mexico lease blocks offshore from Louisiana and Texas. Pogo
also owns approximately 340,000 gross leasehold acres in various oil and gas
provinces onshore in the United States and Canada, approximately 713,000 gross
acres in the Gulf of Thailand, approximately 778,000 gross acres in Hungary, and
approximately 193,000 gross acres in the United Kingdom and Denmark sectors of
the North Sea.
Private Securities Litigation Reform Act Safe Harbor Statement
Except for the historical and present factual information contained herein, the
matters set in this presentation, including statements as to the expected
benefits of the merger such as efficiencies, cost savings, market profile and
financial strength, and the competitive ability and position of the combined
company, and other statements identified by words such as "expects," "projects,"
"plans," and similar expressions are forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including the
possibility that the anticipated benefits from the merger cannot be fully
realized, the possibility that costs or difficulties related to the integration
of our businesses will be greater than expected, the impact of competition and
other risk factors relating to our industry as detailed from time to time in
Pogo's reports filed with the SEC. Pogo and North Central disclaim any
responsibility to update these forward-looking statements.
Additional Information
Investors and security holders of Pogo Producing Company are urged to read the
proxy statement regarding the business combination transactions referred to
above, when it becomes available, because it will contain important information.
The proxy statement will be filed with the SEC by Pogo Producing Company.
Investors and security holders may obtain a free copy of the proxy statement
(when it is available) and other documents filed by Pogo Producing Company with
the SEC at the SEC's website at www.sec.gov. The proxy statement and these
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other documents may also be obtained free of charge by directing a request to
Pogo Producing Company, 5 Greenway Plaza, Suite 2700, Houston, TX 77046,
Attn: Investor Relations, or by telephone at (713) 297-5000 or by fax at
(713) 297-5100.
In addition, the identity of the individuals who, under SEC rules, may be
considered "participants in the solicitation" of Pogo Producing Company
stockholders, in connection with the proposed merger, and information concerning
their interests, is available in an SEC filing under Schedule 14A made by Pogo
Producing Company on November 20, 2000.
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There will be a financial analyst teleconference call on Monday, November 20,
2000 at 9:45 AM EST. The call can be monitored through a live broadcast via the
World Wide Web at www.pogoproducing.com and www.streetfusion.com. A rebroadcast
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will be available on both of these websites through December 20, 2000.
Real Network's Real Player or Microsoft Media Player is required to access
the webcast. They can be downloaded from www.real.com or
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www.microsoft.com/windows/mediaplayer.
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Contact for Pogo:
James P. Ulm II
Vice President and Chief Financial Officer
(713) 297-5152
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