Parker CEO disputes Mesa deal bad for shareholders
Reuters, Thursday, May 01, 1997 at 14:44
NEW YORK, May 1 (Reuter) - Parker & Parsley Petroleum's
(NYSE:PDP) chief executive, Scott Sheffield, on Thursday disputed
a report arguing his company's proposed merger with Mesa Inc
(NYSE:MXP) is not good for Parker's shareholders.
He also said the deal will be dilutive for shareholders for
two years but should add to earnings after that.
"There will be a couple of percent dilution in the first
couple of years. However, it will be accretive thereafter,"
Sheffield told analysts at an investment symposium in New York
organized by the Independent Producers Association of America.
Parker & Parsley and Mesa announced early in April that
they planned to combine assets valued at approximately $4.2
billion and form Pioneer Natural Resources Co, making it the
third largest U.S. oil and gas exploration and production
company.
The deal is subject to shareholder approval in votes
scheduled for July.
Sheffield diputed an article earlier this week in the Wall
Street Journal in which an analyst argued that Parker & Parsley
shareholders were getting short shrift out of the merger deal.
Under the terms of the deal, Parker shareholders get one
Pioneer share for each Parker share held while Mesa's owners
get one Pioneer share for every seven Mesa held.
The Journal article quoted one analyst as saying the value
of Parker's assets at about $10 a share above the $29 a share
they stood before the transacton was announced. (They closed at
$33 on Wednesday).
On Thursday, Sheffield said that analysis was based on an
overvaluation of Parker gas properties, Spraybarry and Hugoton,
in Kansas and Texas. He said these type of assets were selling
for around $1 to $1.25 per barrel of oil equivalent (boe) in
the ground, while some analysts had bee assuming a value of
around $5 or $6.
Copyright 1997, Reuters News Service |
