Helmerich/Payne to spin off oil, gas units
biz.yahoo.com
Monday February 25, 11:01 am Eastern Time
(UPDATE: adds detail, updates stock prices, adds outlook for H&P)
TULSA, Okla., Feb 25 (Reuters) - Helmerich & Payne Inc. (NYSE:HP - news) said on Monday it will spin off its oil and gas production division to focus on contract drilling operations, which comprised about 59 percent of the company's 2001 revenues.
H&P said it will spin-off its oil and gas operations into a separate company named Cimarex Energy Co., which will buy Denver-based Key Production Co. (NYSE:KP - news), creating a publicly-traded oil and gas production entity with a pro forma market value of about $600 million based on Key's current share price.
Using Key's stock price close on Friday of $15.65, and considering its nearly 14.2 million shares outstanding as of the end of the third quarter, Key's portion of the new company is about $221.8 million.
Under terms of the deal, H&P shareholders will receive about 0.53 shares of Cimarex common for each share of H&P stock, giving them 65.25 percent of Cimarex. Key shareholders will receive one share of Cimarex stock for each share of Key stock, or 34.75 percent.
Both Helmerich & Payne and Key have strong exploration and production operations in the Midcontinent region of the United States -- primarily in Kansas and Oklahoma, with daily production in 2002 190 million cubic feet per day (mmcf).
Combining operations will create an entity with proved reserves of 392 billion cubic feet equivalent (bcfe) of natural gas equivalent, of which is 78 percent is natural gas and 98 percent is ``proved developed.''
F.H. Merelli, chairman and chief executive officer of Key, will be the CEO, president and chairman of Cimarex. Steve Shaw, H&P vice president of exploration and production, will be executive vice president.
Cimarex's corporate headquarters will be in Denver and operational headquarters in Tulsa. H&P said that it expected that ``substantially all of the current employees of Key and H&P's Oil and Gas division will become employees of Cimarex.''
H&P expects the deal to close in the third quarter of 2002. After completion of the deal, Cimarex will change its accounting method from ``successful efforts'' used by H&P to ``full cost,'' and will change its fiscal calendar year to end Dec. 31 from Sept. 30, now used by H&P.
H&P said that it expects its remaining operations to earn in 2003 before interest, taxes, depreciation and amortization to range from $3.00 to $4.70 per share, depending on the the dayrates for drilling rigs in the U.S.
Shares of Key were trading up 10 cents, or .64 percent, at $15.75 on Monday while shares of H&P were trading up 82 cents, or 2.51 percent, at $33.44. |
