Filed by Anadarko Petroleum Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Union Pacific Resources Group Inc.
Commission File No. 1-13916
ANADARKO TO MERGE WITH UNION PACIFIC RESOURCES GROUP
THE NEW ANADARKO WILL HAVE BROADER GROWTH PORTFOLIO
AND MORE FINANCIAL STRENGTH
HOUSTON AND FORT WORTH, TEXAS, APRIL 3, 2000 -- Anadarko Petroleum
Corporation (NYSE:APC) and Union Pacific Resources Group Inc. (NYSE:UPR) today
announced a merger that will create one of the largest independent exploration
and production companies in the world in terms of 1999 reserves, production and
drilling activity. The combined company will be called Anadarko Petroleum
Corporation and will be headquartered in Houston.
Under the agreement, which was unanimously approved by each company's
board of directors, UPR shareholders will receive 0.4550 Anadarko common shares
for each UPR common share they own. As a result, Anadarko shareholders will hold
approximately 53 percent of the combined company and UPR shareholders
approximately 47 percent. Based on the Anadarko closing price of 38.6875 on
March 31, 2000, the combined company will have about 243 million shares
outstanding and a market capitalization over $9 billion. Based on this closing
price, the transaction has an implied value to UPR shareholders of $17.60 per
share, representing a 21% premium to UPR's closing price on Friday, March 31,
2000. The stock-for-stock deal is subject to approval by shareholders of both
UPR and Anadarko and customary regulatory approval. Following the merger, UPR
will be a wholly owned subsidiary of Anadarko.
Anadarko expects the merger to be treated as a tax-free reorganization and
accounted for as a purchase. The merger agreement includes a provision under
which UPR and Anadarko granted each other the right to purchase 19.9% of each
other's outstanding shares. Anadarko believes the proposed merger will be
immediately accretive to both cash flow and earnings.
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Robert J. Allison, Jr. will continue to be Chairman and Chief Executive
Officer of Anadarko. George Lindahl III, Chairman, President and Chief Executive
Officer of UPR, will become Vice Chairman of Anadarko after the merger. Five
members of UPR's Board of Directors will join the Anadarko board, subject to
Anadarko shareholder approval of the larger board.
Comments by Bob Allison: "This merger is an excellent fit for both
companies. We blend Anadarko's strengths in exploration with what UPR does
best - profitable exploitation with industry-leading drilling and completion
technology. The new Anadarko will have the financial strength to aggressively
pursue a broader portfolio of projects. We can accelerate activity in the most
prospective areas offering the best returns for shareholders. We do expect some
modest cost reductions with the merger, but that's not what drives this deal.
It's about complementary skills and assets that can give us dramatic growth and
profitability. We expect to grow faster and beyond the levels either company
could achieve individually. Given the current outlook for energy markets, now is
the time to step up the pace of drilling for new energy reserves -- particularly
North American natural gas. More energy for America is good news for our
shareholders and it's good news for consumers as well."
Comments by George Lindahl: "The merger provides significant benefits to
UPR shareholders. It recognizes the value of our core producing assets and our
portfolio of projects throughout the Americas. We bring to the new Anadarko
skills and experience that are complementary to their exploration strength. UPR
is an industry leader in drilling and completion technology. That expertise can
now be applied to a larger asset base with stronger capital resources than ever
before. This deal offers UPR's shareholders an exciting future - marked by
significant increases in production, earnings and cash flow - starting this
year. We will have more exposure to high-potential exploration and increased
opportunity for growth in the near-term. The combined companies share a
commitment to organic growth through exploration and exploitation strategies
that will continue to build value for shareholders in the future."
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Comments by Anadarko President and Chief Operating Officer John Seitz:
"Anadarko has spent years developing what I believe to be the best team of
energy explorers in the business and providing them the best available
technology. Our team has delivered consistent growth in production and reserves
and found a dozen giant oil and gas fields over the past 20 years. In recent
years, our team has identified more outstanding drilling opportunities than we
could fund with available cash flows. This merger gives us more capital and
talented people, so we can immediately go to work finding new reserves of oil
and gas. With the best people in the business, we expect to generate even more
impressive growth and returns for our shareholders!"
Anadarko said the company's Growth Portfolio would be well balanced around
three types of worldwide activity -- Exploration, Development and Exploitation.
The new Company would also have more Financial Strength than was previously
offered by either company alone.
GROWTH PORTFOLIO
----------------
Proved Reserves -- The combined companies' proved reserves would be
equally split between crude oil and natural gas and equivalent to 1.94 billion
barrels of oil (BOE) or about 11.65 Trillion cubic feet of gas (Tcfe). About 80
percent of total reserves are in North America and 20 percent in international
areas. At current expected production rates, the reserve life index of the
combined companies would be 10.8 years.
Exploration -- The merger combines exploration projects now underway in
both companies in some of the highest potential areas of the world today. To
date, Anadarko has identified over 100 exploration prospects from the combined
companies' portfolio with over 11 billion barrels of net un-risked reserve
potential. In the U.S., significant reserve potential exists in a number of
exploration plays in Texas, the Gulf of Mexico (conventional, sub-salt and
deepwater plays), Alaska and the Rocky Mountain areas. In foreign exploration,
the new portfolio will include projects in Canada, the Sahara Desert of Tunisia,
the North Atlantic Margin, and Latin America. The new Anadarko will now have the
financial strength to aggressively pursue additional exploration ventures
worldwide.
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Development -- Near-term cash flow will benefit from a broad portfolio of
development projects. Construction and development drilling are already underway
to commercialize recently discovered oil and gas fields in Alaska (Alpine &
Moquawkie fields), Algeria (the HBN and HBNS fields) and the Gulf of Mexico
(Tanzanite & Hickory fields). In addition, large development drilling projects
are planned to increase oil and gas production in Texas (the Carthage, Ozona and
Giddings Fields); in Wyoming (the Wamsutter Field); and in Canada (the Hatton
and Jedney fields). In 2001, these development projects should generate over 10
million BOE of new production with even higher levels in 2002.
Exploitation -- Significant growth opportunity has been identified in
existing fields, where in-fill and step-out drilling, state-of-the-art
technologies in reservoir engineering, drilling, completion and production can
be used to extend field limits, increase production and recover more reserves.
Many projects represent a blend of exploration and development such as the
Bossier Play in East Texas. To date, Anadarko has identified over 50 such
projects in the inventory of the combined company. Net potential reserves from
these projects are one billion BOE (un-risked).
The new company will play a major role in the growing North American
natural gas market.(1) Based on 1999 data for all energy companies (independents
and majors), Anadarko will now rank as the 6th largest natural gas producer in
North America, and the 5th largest holder of natural gas reserves. (See
Attachments). The new Anadarko will hold significant acreage positions and
drilling opportunity in most of the high-potential, gas-rich basins of North
America, including Western Canada, and the U.S. basins of the Rocky Mountains,
the Mid-continent, Texas, and the Gulf of Mexico. These basins today account for
90% of U.S. gas supply.
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(1) A 1999 study by the National Petroleum Council predicted US natural gas
consumption would grow from 22 Tcf in 1998 to 26 Tcf in 2005 and reach 31 Tcf in
2015.
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FINANCIAL STRENGTH
-------------------
Earnings and Cash Flow -- Anadarko believes the proposed merger will be
immediately accretive to both cash flow and earnings. Anadarko estimates that if
the companies were combined for the year 2000, cash flow would have been about
$1.8 billion (or about $7.50 per share). For the year 2001, given the current
outlook for commodity prices, cash flow is expected to increase further, to more
than $2 billion (or about $9.00 per share).
Balance Sheet - The new Anadarko will have a stronger balance sheet than
either company had individually. This increased financial strength should give
the new Anadarko continued access to capital markets to continue its drilling
and development projects around the world. Anadarko will utilize full-cost
accounting for the combined company. On a pro-forma consolidated basis as of
year-end 1999, the combined companies would have had a total capitalization of
$10 billion, comprised of $5.9 billion of equity and $4.1 billion of debt. The
debt to total capitalization ratio would be 41%. The average maturity life of
the debt would be 21 years, and the average annual interest rate would be 7.11%.
Credit Suisse First Boston and Wachtell, Lipton, Rosen & Katz served as
advisors to Anadarko for this transaction. Advisors to UPR were the firms of
Simmons and Company, Goldman Sachs, and Morgan, Lewis and Bockius.
SUMMARY TRANSACTION TERMS
-------------------------
o Exchange Ratio 0.4550 APC shares for each UPR Share
o Accounting Structure Purchase Accounting/Full Cost
o Tax Structure Tax Free Merger
o Capitalization Debt-Cap Est. @ 41%
o Company Name Anadarko Petroleum Corporation
o Headquarters Houston, Texas
o Board of Directors 8 APC, 5 UPR (proposed)
o Target Closing Date July 2000
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FORWARD LOOKING STATEMENTS
--------------------------
Except for historical information, all other information in this news
release consists of forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties, which could cause actual results to differ
materially from those projected, anticipated or implied. The most significant of
these risks and uncertainties are described in Anadarko's and UPR's SEC filings
and reports and exhibits to those reports, and include (but are not limited to),
the costs and difficulties related to the integration of acquired businesses,
commodity pricing and demand, exploration and operating risks, development
risks, and the costs and other effects of governmental regulation and legal and
administrative proceedings. Anadarko and UPR undertake no obligation to publicly
update or revise any forward-looking statements.
All stockholders should read the proxy statement/prospectus concerning the
merger that will be filed with the SEC and mailed to stockholders. The proxy
statement/prospectus will contain important information that stockholders should
consider before making any decision regarding the merger. Stockholders will be
able to obtain the proxy statement/prospectus, as well as other filings
containing information about Anadarko Petroleum Corporation and Union Pacific
Resources Group Inc., without charge, at the SEC's Internet site
(http://www.sec.gov). Copies of the proxy statement/prospectus and the SEC
filings that will be incorporated by reference in the proxy statement/prospectus
can also be obtained, without charge, from the Corporate Secretary of the
appropriate company.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
-------------------------------------------
Anadarko Petroleum Corporation ("Anadarko") and certain other persons
named below may be deemed to be participants in the solicitation of proxies of
Anadarko's stockholders to approve the issuance of Anadarko's common stock.
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The participants in this solicitation may include the directors of
Anadarko: Conrad P. Albert, Robert J. Allison, Jr., John N. Seitz, Larry
Barcus, James L. Bryan, Ronald Brown, John R. Butler, Jr., and John R.
Gordon; the following executive officers of Anadarko: Robert J. Allison, Jr.,
(Chairman and Chief Executive Officer), John N. Seitz (President and Chief
Operating Officer), Michael E. Rose (Senior Vice President, Finance), Charles
G. Manley (Senior Vice President, Administration) and William D. Sullivan
(Vice President, International Operations); and the following other members
of management and employees of Anadarko: A. Paul Taylor, Jr. (Investor
Relations) and James A. Canino (Public Affairs). As of the date of this
communication, none of the foregoing participants individually beneficially
owns in excess of 1.5% of Anadarko's common stock, or in the aggregate in
excess of 4% of Anadarko's common stock.
Except as disclosed above, to the knowledge of Anadarko, none of the
directors or executive officers of Anadarko or the employees or other
representatives of Anadarko named above, has any interest, direct or indirect,
by security holdings or otherwise in Anadarko.
# # # # # # #
For additional information, contact:
Analysts and Investors: Media:
- ----------------------- ------
A. Paul Taylor - Anadarko Tony Canino - Anadarko
Phone: 281-874-3471 Phone: 281-873-3855
Patrick Mooney - UPR Dan Sullivan - UPR
Phone: 817-321-7169 Phone: 817-307-6286
David Larson - UPR
Phone: 817-321-7294
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[ANADARKO PETROLEUM CORPORATION LOGO]
THE NEW ANADARKO
NORTH AMERICAN GAS PRODUCTION
[Bar graph illustrating the following data:
COMPANY GAS PRODUCTION, BCF/YEAR
- ------- -------------------------
XON/MOB 1,479
BPA 1,082
SHL** 787
BR 699
CHV 669
New APC 634
TX* 550
ARC 540
UPR 464
VRI 401
P 380
UCL* 329
COCa 316
EOG 281
MRO 275
OXY 242
APA 205
DVN 199
KMG 191
APC 170]
* Data for U.S. only, Canadian data unavailable
** Data for 1998, total North American data for 1999 unavailable
<PAGE>
[ANADARKO PETROLEUM CORPORATION LOGO]
THE NEW ANADARKO
NORTH AMERICAN GAS RESERVES
[Bar graph illustrating the following data:
COMPANY PROVED GAS RESERVES, TCF
- ------- -------------------------
XON/MOB 16.3
BPA* 12.0
BR 7.4
SHL** 7.0
New APC 5.8
ARC 5.2
TX* 4.2
P 3.9
CHV* 3.8
UPR 3.3
VRI 2.7
EOG 2.5
APC 2.5
COCa 2.2
MRO 2.1
DVN 1.9
OXY 1.8
UCL 1.7
APA 1.6
KMG 1.2]
* Data for U.S. only, Canadian data unavailable
** Data for 1998, total North American data for 1999 unavailable
<PAGE>
[ANADARKO PETROLEUM CORPORATION LOGO]
THE NEW
ANADARKO -
NORTH
AMERICAN
GAS ASSETS
[Map of North America showing activity areas and land grant]
<PAGE>
[ANADARKO PETROLEUM CORPORATION LOGO]
THE NEW ANADARKO
WORLDWIDE ACTIVITY
[Map of the world highlighting Company's core areas and other activity areas.]
<PAGE>
SCHEDULE OF INVESTOR MEETINGS
-----------------------------
ANADARKO AND UNION PACIFIC RESOURCES
------------------------------------
MONDAY, APRIL 3, 2000 - NEW YORK CITY
- -------------------------------------
9:00 a.m. (EDST) Simulcast Conference Call
St. Regis Dial 913-981-5509
Fontainebleau Room - Second Floor Confirmation: 531722
5th @ 55th Street Replays @ 402-220-6969
New York, NY
TUESDAY, APRIL 4, 2000 - NEW ORLEANS (HOWARD WEIL CONFERENCE)
- -------------------------------------------------------------
Presentation Time To Be Announced
Sheraton Hotel
500 Canal Street
New Orleans, LA
WEDNESDAY, APRIL 5, 2000 - BOSTON
- ---------------------------------
9:30 a.m. (EDST)
Four Seasons Hotel
Ballroom, Salon B - Second Floor
200 Boyston Street
Boston, MA
THURSDAY, APRIL 6, 2000 - DENVER
- --------------------------------
12:30 p.m. (MDST)
Top of the Rockies - Denver Petroleum Club
Bell Creek Room, 37th Floor
555 17th Street
Denver, CO
FOR MORE INFORMATION CALL
281/874-3491
<PAGE>
CONFERENCE CALL INSTRUCTIONS:
- -----------------------------
To participate in the Conference Call:
1) MONDAY, APRIL 3, 2000
2) DIAL 913-981-5509 ABOUT 20 MINUTES PRIOR TO 9:00 A.M. (EST)
3) REFER TO CONFIRMATION #531722, AND YOU WILL BE CONNECTED.
COMPUTER ACCESS TO CONFERENCE CALL
----------------------------------
Anadarko will offer graphics during the call that may be viewed on your computer
over the Internet. To view these graphics, please visit Anadarko's home page at
www.anadarko.com. However, you will need to advance them during the call. A
password will be given at the beginning of the call for access to the
presentation materials.
