Vintage Petroleum Assets Likely To Draw Private Equity Interest
17 Oct 14:00
By Shasha Dai
Of LBO Wire
NEW YORK -(Dow Jones)- Vintage Petroleum Inc. (VPI) will be putting some
assets on the block as part of its acquisition by Occidental Petroleum Corp.
(OXY), and private equity firms are likely to take a look.
Occidental, Los Angeles, is buying Vintage, Tulsa, Okla., in a deal valued at
$3.8 billion in cash and stock. Both companies are publicly traded oil and gas
exploration concerns.
Occidental, also known by its ticker name Oxy, likes Vintage's operations in
California, Latin America and the Middle East. Vintage's other assets,
primarily in Texas and the Gulf Coast, are "nonstrategic," Oxy said.
Those assets include oil fields in East Texas and along the Gulf Coast, as
well as unconventional gas reserves in the midcontinent region. Oxy said it
also may sell some of the less attractive oil and gas fields in California.
It's hard to put a price tag on the assets because of their diversified
nature, said an investment banker. As for the oil properties, a rule of thumb
is the valuation of their proved reserved, according to the banker. Vintage has
about 70 million barrels in proved reserves in those areas, which the market
currently values at $13 to $20 per barrel, Oxy said. At that price, those oil
assets could be worth as much as $1.4 billion.
"I'm sure we'll be interested in taking a look (at those assets)," said
Jonathan Farber, a managing director at Lime Rock Partners, Westport, Conn., an
energy-focused private equity firm. Though Lime Rock hasn't done any due
diligence on Vintage, Farber said Lime Rock is reviewing more than a dozen
potential deals each week. The firm recently teamed with Greenhill Capital
Partners, another energy investor, to back Coronado Resources, which drills gas
from unconventional resources.
Carneros Energy, a Bakersfield, Calif., oil and gas exploration business
backed by Warburg Pincus, could be interested in Vintage's California assets,
market participants say. Other possible buyers include First Reserve Corp. and
Metalmark Capital.
More assets could be sold in divestitures as the industry continues to
consolidate, said Mark Carmain at energy investment banking firm Petrie Parkman
& Co., who was part of the team that advised on the Oxy-Vintage deal.
"Many of these large transactions are followed by portfolio rationalization,"
Carmain said.
(LBO Wire, published by Dow Jones Newsletters, covers buyouts and private
equity.)
-By Shasha Dai, Dow Jones Newsletters/LBO Wire; 201-938-4298;
shasha.dai@dowjones.com
(END) Dow Jones Newswires
10-17-05 1400ET
Copyright (c) 2005 Dow Jones & Company, Inc. |
