Here is the Oil driver today.
U.S. oil company stocks soar, fueled by takeover talk
NEW YORK, March 29 (Reuters) - U.S. oil stocks jumped
sharply on Monday as BP Amoco's <BPA.L> possible takeover of
Atlantic Richfield Co. <ARC.N> poured gasoline on already fiery
talk about further oil sector consolidation.
Atlantic Richfield (ARCO) shares showed some of the stock
market's sharpest gains on Monday, climbing over $6, or almost
10 percent, to $72 in composite New York Stock Exchange trade.
Other oil company shares followed suit, with the Standard &
Poor's Domestic Oil and Gas Index <.SPOILD> up 52.63 points,
7.2 percent, at 783.42. The broader S&P 500 Index was up 22.42
points, or 1.75 percent, at 1305.15.
The sharp climb in oil stocks followed confirmation that BP
Amoco is holding talks to buy ARCO, the nation's seventh
largest oil company, in a stock deal worth about $25 billion.
The takeover would be the latest in a string of deals which
have reshaped the oil industry, culminating in last fall's
colossal deal between Exxon Corp. <XON.N> and Mobil Corp.
<MOB.N>, which is still under regulatory review.
Industry analysts see further consolidation ahead, with
companies such as Texaco Inc. <TX.N>, Chevron Corp. <CHV.N>,
and Phillips Petroleum Co. <P.N> suddenly forced to join forces
to remain competitive with so-called supermajors Exxon-Mobil,
Royal Dutch Shell <RD.AS><SHEL.L>, and BP Amoco.
Indeed, Texaco has been at the center of a whirlwind of
rumors over recent months, including speculation that it's
studying a takeover of Burlington Resources <BR.N>, the largest
of the U.S. independent oil and gas producers.
Texaco has also been rumored to be a possible partner for
Chevron, the nation's third largest oil company.
"This clearly shows the merger trend is not abating," said
Gene Nowak, of ABN Amro Inc. "In fact, it is intensifying. We
think Texaco and Chevron are very strong consolidation
candidates," he added, but didn't rule out a Texaco deal with
Royal Dutch/Shell, with which it already had a U.S. refining
and marketing venture.
Phillips Petroleum Co. also is being closely watched after
its $8 billion North American refining and marketing deal with
Ultramar Diamond Shamrock Corp. <UDS.N> fell apart earlier this
month.
Phillips may be attracted to Conoco Inc. <COC.N>, with
which it also had failed talks about a deal, considering plans
by parent DuPont Co. <DD.N> to sell its remaining 70 percent
stake in the company.
"What are you going to do now now if you are (Italian oil
concern) ENI, Chevron, Texaco, and you can throw Phillips and
Conoco in there, too." said Adam Sieminski, of BT Alex Brown.
"It raises interesting questions about how you survive.
These are large integrated international companies but they are
so small compared to the three super majors," he said.
The chief executives of Chevron, Texaco, Phillips and
others have dismissed the idea that the companies need to merge
to survive. But Sieminski said, "ARCO was saying the same thing
and now it looks like they are going to the altar."
Early Monday, Texaco shares were up $3 at $58.5625, Chevron
was up $2.8125 at $89.625, Phillips was up 1.875 at $47.4375 on
the New York Stock Exchange. Also, Burlington was trading
$1.125 higher at $41.97, while Conoco was up 81.25 cents at
$24.6875.
((Paul Thomasch, New York Energy Desk, 1 212 859-1889;
fax 859-1629))
REUTERS |
