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UNITED STATES
SECURITIES AND EXCHANGE COMMISSSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 18, 1999
(Date of earliest event reported: August 16, 1999)
BURLINGTON RESOURCES INC.
(Exact name of registrant as specified in the charter)
Delaware 1-9971 91-141384
(State of other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
5051 Westheimer, Suite 1400,
Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 624-9500
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Item 5. Other Events
On August 16, 1999, Burlington Resources Inc. ("Burlington") and
Poco Petroleums Ltd. ("Poco") entered into a definitive combination
agreement providing for the combination of Poco with Burlington. The total
value of the transaction is approximately $2.5 billion, including
approximately $750 million in debt of Poco. The combination is expected to
be accounted for as a pooling of interests. The transaction is subject to
the approval of the stockholders of each of Burlington and Poco and other
customary conditions and is expected to close by year end.
Under the proposed transaction, Poco stockholders will receive
0.250 of an exchangeable share of Poco for each of their Poco common
shares. Each exchangeable share will have economic and voting rights
equivalent to one share of Burlington common stock. The exchangeable shares
are expected to be listed on the Toronto and Montreal Stock Exchanges and
will be exchangeable at any time, at the holder's option, for shares of
Burlington common stock on a one-for-one basis.
A copy of the press release issued by Burlington and Poco
announcing the transaction is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated August 16, 1999
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
BURLINGTON RESOURCES INC.
By: /s/ Frederick J. Plaeger II
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Dated: August 18, 1999
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EXHIBIT INDEX
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Exhibit Number Description
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99.1 Press Release dated August 16, 1999
Exhibit 99.1
Contact: Frederick J. Plaeger II
(713) 624-9500
FOR IMMEDIATE RELEASE
BURLINGTON RESOURCES TO ACQUIRE POCO PETROLEUMS
IN TRANSACTION VALUED AT US$2.5 BILLION
-- Transaction Will Enhance BR's Position as the Leading Independent
Exploration and Production Company, Establish It as One of
Top Four Natural Gas Producers in North America --
-- Addition of Major New Presence in Western Canada Will Create Combined
Enterprise with Proved Reserves of Approximately 10 TCFE --
-- Transaction Expected to Be Immediately Accretive to Earnings,
Cash Flow and Net Asset Value Per Share --
HOUSTON, TEXAS and CALGARY, ALBERTA, August 16, 1999 - Burlington
Resources Inc. (NYSE: BR) ("BR"), of Houston, and Poco Petroleums Ltd. (TSE
and ME: POC) ("Poco"), of Calgary, today announced that they have agreed to
combine their businesses through BR's acquiring all common shares of Poco.
The US$2.5 billion (C$3.7 billion) transaction will enhance BR's position
as the leading independent exploration and production company.
Under the terms of the definitive agreement, Poco shareholders
will receive BR common equivalent shares ("Exchangeable Shares") based on a
fixed exchange ratio of 0.250 Exchangeable Shares for each Poco share held.
Based on BR's closing stock price on Monday, August 16, the exchange ratio
represents an implied price of approximately C$16.78 (US$11.33) per Poco
share. Given the 157 million Poco shares on a fully diluted basis, and the
assumption by BR of approximately US$750 million (C$1.1 billion) of Poco
debt, the transaction has a total value of approximately US$2.5 billion
(C$3.7 billion). The agreement was unanimously approved by the Boards of
Directors of both companies, and the directors and officers of Poco have
agreed to vote their shares in favor of the transaction.
The transaction is expected to be accounted for as a pooling of
interests and to qualify as a tax-free reorganization. It is anticipated
that, excluding the impact of any one-time transaction-related charges, the
transaction will be immediately accretive to earnings, cash flow and net
asset value per share in 1999 and beyond. The parties expect to complete
the transaction by year-end.
The combined company will be the fourth-largest natural gas
producer in North America and the largest among independent E&P companies.
Stated on a basis consistent with BR's current reporting practices, the two
companies on a combined basis had total worldwide reserves of 9.9 trillion
cubic feet equivalent as of December 31, 1998. Combined 1998 worldwide gas
production was 2.1 billion cubic feet per day, oil production was
approximately 106 thousand barrels per day; the total net worldwide acreage
position was 21.4 million acres, with 3.6 million acres in Canada; and
operating cash flow was approximately US$1.1 billion (C$1.6 billion). On
August 16, 1999, equity market capitalization was about US$9.9 billion
(C$14.6 billion). The combined company's global asset base, financial
resources, opportunity mix and technical talent will further strengthen
BR's leadership position among independent E&P companies worldwide, with a
premier position in North America.
Bobby S. Shackouls, Chairman, President and Chief Executive
Officer of Burlington Resources, said: "The transaction fits perfectly with
BR's overriding mission to create value for our shareholders on a per share
basis. Establishing a major presence in Canada enhances our position as a
dominant independent E&P company with a strong North American natural gas
focus. Poco Petroleums is an excellent partner to enable us to achieve that
objective. Under the leadership of Craig Stewart and his colleagues, Poco
has assembled an outstanding set of assets and operational skills that
complement our own, and has built an organization that shares our obsession
with value creation and entrepreneurial culture.
"The addition of Poco's 3.1 million acres of undeveloped
leasehold to our quality fee mineral and acreage positions will
significantly enhance our inventory of high-potential exploration
inventory. The combined company will be financially strong, with long-term
debt comprising approximately 42% of the book capitalization of the
company. BR, with Poco as its partner in Canada, will be better positioned
than at any time in its history to continue the implementation of our
aggressive, global, value-oriented capital program. In short, Poco is an
ideal company to be BR's growth platform in Canada, and to build value for
the shareholders of the combined enterprise," Mr. Shackouls said.
Craig W. Stewart, President and Chief Executive Officer of Poco
Petroleums, said: "Poco recognized a number of years ago that the
traditional discount that Canadian gas was trading for relative to prices
in the United States would disappear. We also believed strongly that prices
would rise in North America as a whole, and positioned our production base
towards natural gas. Importantly, we also invested heavily in land and
seismic, allowing us to pursue a large ongoing natural gas-directed
exploration program. By joining forces with Burlington Resources, the
pre-eminent `super-independent' E&P company, we will become a major part of
a combined enterprise with the size and scope, operating skills and
financial resources to more aggressively pursue the growth opportunities we
have both identified in Canada, the United States and around the globe. In
reviewing a broad range of strategic opportunities over the past several
months, it became increasingly obvious that the business combination of
Poco Petroleums and Burlington Resources made compelling sense
strategically, operationally and financially. As such, this merger creates
tremendous upside potential for all Poco shareholders, both now and going
forward."
Mr. Shackouls noted that BR currently has no assets north of the
U.S.-Canadian border and that there is virtually no overlap between the two
companies' operations. Accordingly, it is currently anticipated that
substantially all management, staff and operational employees of Poco will
become part of the combined enterprise, which will continue to have a major
presence in Calgary.
The Exchangeable Shares will have the same voting rights,
dividend entitlements and other attributes of BR common shares, and will be
exchangeable, at each shareholder's option, for BR common shares.
Completion of the transaction is subject to approval by the
shareholders of both companies, as well as closing conditions and other
regulatory and government approvals. The combination agreement also
contains customary non-solicitation provisions and substantial termination
fees.
BR was advised by Morgan Stanley Dean Witter with regard to the
transaction and Poco was advised by RBC Dominion Securities.
Poco Petroleums Ltd. is a top independent oil and gas exploration
and development company operating in Western Canada. Poco pursues high
impact, deep natural gas exploration in its Northern Region and
liquids-rich natural gas in its Western Region. The smaller Eastern Region
is in harvest mode.
Burlington Resources is engaged in exploring for, developing,
producing and marketing oil and gas. The Company conducts activities in
several strategic areas, domestically and internationally, including the
San Juan Basin of New Mexico, the Mid Continent area of the United States,
including the Rocky Mountains, the deepwater province of the Gulf of
Mexico, the East Irish Sea, the North Sea, North Africa and Latin America.
BR ranks first among U.S. independent oil and gas companies in terms of
proved U.S. reserves.
Information on Forward-Looking Statements
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This press release contains projections and other forward-looking
statements within the meaning of section 21E of the Securities and Exchange
Act of 1934. These projections and statements reflect the two companies'
current views with respect to future events and financial performance. No
assurance can be given, however, that these events will occur or that these
projections will be achieved and actual results could differ materially
from those projected as a result of certain factors. A discussion of these
factors is included in BR's periodic reports filed with the Securities and
Exchange Commission.
# # #
Contacts: Burlington Resources
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Investors:
John Carrara
(713) 624-9548
Clay Jeansonne
(713) 624-9354
Jeff Monte
(713) 624-9384
Media:
Roy Winnick or Mark Semer
Kekst and Company
(212) 521-4842 or 4802
Poco Petroleums
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John Ferguson
(403) 260-8059
