GOU.TO - Wednesday February 21, 2:23 pm Eastern Time
Gulf Canada CEO sees himself as predator, not prey
CALGARY, Alberta, Feb 21 (Reuters) - Gulf Canada Resources Ltd.'s (Toronto:GOU.TO - news) chief executive said on Wednesday he believed recent rumors that his company was a takeover target were unfounded, and that Gulf was more likely to assume the role of predator than prey.
Gulf, which on Tuesday reported earnings for 2000 that surged to C$148 million ($96 million), up from a deep year-earlier loss, has been speculated to be in the sights of various oil-industry rivals since bolstering its balance sheet with debt repayment and its takeover of Crestar Energy.
``Someone made the comment here the other day that these merger rumors are like UFOs -- you keep hearing about them but I've never seen one,'' Gulf CEO Dick Auchinleck told analysts in a conference call.
``I think what people should be thinking about is, we did, I think, a superb acquisition in terms of Crestar, and I think people should be thinking of us more as a potential acquiror as opposed to somebody being taken out.''
Auchinleck has said the once-debt-laden Gulf was now concentrating on growing its business after its C$1.5-billion acquisition last autumn of Crestar, which boosted oil and gas production and improved its debt-to-cash flow ratio to a level in line with its industry peers.
However, analysts and investors have speculated Gulf could be a target of companies such as Talisman Energy Inc. (Toronto:TLM.TO - news), which has long rumored as a potential suitor, or a U.S. player like Conoco Inc. (NYSE:COCa - news), which has been beefing up its Canadian operations.
Gulf, with a market capitalization of C$4.7 billion, also operates in Indonesia, the Dutch North Sea, Ecuador and is a major gas-reserve holder in the Mackenzie Delta region of the Canadian Arctic, where it is among four major firms studying the construction of a multibillion-dollar pipeline.
Its shares were off 33 Canadian cents in Toronto on Wednesday to C$8.70. By the end of last week the stock had risen about 10 percent in a month, based partly on takeover speculation, analysts have said.
Auchinleck said Gulf had shown, however, it can embark on acquisitions itself that can boost value for its shareholders and would not be afraid to pull the trigger again.
``I think people may be looking through the wrong end of the telescope here,'' he said.
Meanwhile, Auchinleck said it was unlikely the company would boost its operational spending from its 2001 budget, even though its cash flow is expected to exceed it by a wide margin. Capital spending is budgeted at C$1.2 billion, up 21 percent from last year, excluding the Crestar takeover.
The extra money may be used for property acquisitions in its main worldwide operating regions or to fund a stock buyback now under way, he said.
``Frankly, you probably won't see us increase our capital spending into our core assets,'' Auchinleck said.
``While we have lots of opportunities, we feel that with the number of staff that we have, if we ramped up our capital spending to any higher level we would probably be in a situation where we're not getting the kind of returns we want because we're accelerating the activity to too great a degree.'' |
