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Triton stock falls as buyout
hopes fade
Firm sells project stake; CEO resigns,
layoffs set
07/18/98
By Dianne Solis / The Dallas Morning News
Triton Energy Ltd.'s shares plunged as much as
35 percent Friday after the once highflying
Dallas firm said it failed to get an acceptable
buyout offer and announced that its chief
executive had resigned.
Triton also said it will lay off a "significant"
number of employees, although company
officials wouldn't specify where the layoffs will
occur or how many jobs will be cut. Triton also
said it will take a $160 million after-tax charge,
which is larger than its total 1997 revenue of
nearly $150 million.
After seeking a buyer since March, Triton
announced Friday that Atlantic Richfield Co. of
Los Angeles will acquire half of Triton's interest
in a major natural gas project in the Gulf of
Thailand for $150 million in cash and provide an
additional $180 million over the next seven years
if development objectives are met. The deal
clearly was a disappointment to Wall Street,
which was betting that Triton would find a buyer
for the entire company.
On the New York Stock Exchange on Friday,
Triton's shares closed at $20.63, down nearly
$10 from Thursday's close. In 1996, Triton's
stock was trading at close to $60 a share.
"There are a lot of people who wanted to see the
whole company sold," acknowledged Sheldon R.
Erikson, a Triton board member since 1994 who
was appointed chairman of the company Friday.
Mr. Erikson is chairman, chief executive and
president of Houston-based Cooper Cameron
Corp., an oilfield services firm.
The company said Thomas G. Finck, Triton's
chief executive and president, is leaving to
"pursue other interests."
Mr. Finck joined Triton in 1992 as president.
From 1992 through 1994, Triton racked up
yearly losses. Among the problems was an
investigation by the Securities and Exchange
Commission and U.S. Justice Department into
allegations of corrupt practices in Indonesia
before Mr. Finck joined the company. Without
admitting or denying allegations, Triton and two
former employees agreed to pay $385,000 in
penalties.
In 1995 and 1996, Mr. Finck steadied Triton,
placing it in the black. But Triton lost $9.3 million
in 1997. Then last summer, the stock price
began sliding with the genesis of the Asian
economic crisis and incessant problems with
guerrilla attacks on oil installations in Colombia,
where Triton made a huge and celebrated
discovery in 1991.
Triton may still find a buyer eager to go bottom
fishing, said Fadel Gheit, an energy analyst with
Fahnestock & Co. in New York. A takeover bid
with a 50 percent premium would amount to only
$30 a share, using Friday's closing share price,
Mr. Gheit noted.
"It is a tremendous opportunity," he said.
Another energy analyst, Jim Wickland of Dain,
Rauscher, Wessels Inc., said selling the
company could get complicated. Arco as a
partner in Malaysia and British Petroleum PLC as
a partner in Colombia might dampen enthusiasm,
Mr. Wickland said. British Petroleum, for
example, has the right to top any bid for Triton's
holdings in Colombia, he noted.
Triton's new chairman, Mr. Erikson, didn't rule
out the possibility of the company still being sold.
"If there's somebody that's serious and wants to
talk to us about a transaction, we're open to
that," he said. Mr. Erikson said a "significant
amount" of Triton employees will be cut but
wouldn't elaborate.
Robert B. Holland II, Triton's senior vice
president and general counsel, was appointed
interim chief executive.
Triton will take a $140 million charge in the
second quarter and a $20 million charge in the
third quarter for restructuring costs, the company
said. It will also write down the value of oil and
natural gas holdings because of sagging crude
oil prices.
"We expect to achieve major cost reductions
quickly," Mr. Erikson said.
Exploration and production will continue "with no
less emphasis" in Colombia, Triton's prime
revenue generator, Mr. Holland said. Cutbacks
will take place in other regions, where Triton
leases properties but has announced no
discoveries. Other Triton leases are in such
farflung places as China, Guatemala and
Madagascar.
Triton's new partner, Arco, the nation's
seventh-largest oil and gas exploration concern,
is already a significant player in Southeast Asia,
especially Indonesia. Under terms of the
agreement, Arco will pay $150 million and pay an
additional $130 million in two payments if Triton
meets certain production goals in 2002 and
2005. Arco will provide development capital of
$377 million, which it termed a loan that it will
recover once production begins.
The Malaysian government holds a 50 percent
interest in the block. When Triton announced it
was going on the auction block, it said it needed
to pay $300 million over the next three years to
fund the development of the two gas fields.
Arco's chairman and chief executive Mike R.
Bowlin called its purchase a "world-class asset"
and said, "We have the greatest respect for
Triton and look forward to working with them as
partners."
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