MERGERS-ACQUISITIONS / Pioneer Announces Closing of Chauvco
Acquisition
NYSE SYMBOL: PXD
DECEMBER 18, 1997
DALLAS--In a special meeting held today in Dallas, shareholders of
Pioneer Natural Resources Company ("Pioneer") (NYSE-PXD)
overwhelmingly approved Pioneer's landmark acquisition of Chauvco
Resources Ltd. ("Chauvco") as announced on Sept. 3, 1997.
Approximately 99 percent of the shares present voted in favor of
the transaction, representing 76 percent of Pioneer's outstanding
shares. Pioneer assumed $220 million long-term debt and issued
approximately 25 million equivalent shares of common stock in
exchange for all of Chauvco's common stock. Pioneer now has
approximately 100 million equivalent shares outstanding. Based on
current market prices, the transaction is valued at approximately
$915 million.
Pioneer has allocated approximately $650 million to proved
reserves and the balance to probable and possible reserves,
proprietary seismic data, net assets and working capital. The
acquired properties are 40 percent in Canada and 60 percent in
Argentina. They include 1,740 gross producing wells, nearly 2,000
development locations, and 1.5 million net leasehold acres. At
year end 1996, Chauvco had reported 129 million barrels of oil
equivalent reserves.
"When you are buying assets with rapid growth potential, the
people involved are very important," said Jon Brumley, Pioneer's
Chairman. "It's a privilege to welcome each of the Chauvco people
to Pioneer, from two new directors to experienced management and
other personnel at all levels."
"This acquisition brings us two new core areas exactly where we
wanted: Canada for its gas supply potential and Argentina for its
high quality prospects. With its low royalties and favorable tax
structure, Argentina is one of the best places in the world to
drill," said Scott Sheffield, Pioneer's President and Chief
Executive Officer.
Lon Kile, Pioneer Executive V.P. said, "The company intends to
apply a balanced strategy of acquisitions, exploitation and
exploration to build the Canadian asset base rapidly." When
Pioneer's Canadian drilling season reaches full swing, there will
be four drilling rigs and two work-over rigs running. With a
capital investment of $65 million, 75 new wells are expected to be
drilled in Canada in 1998.
Dennis Fagerstone, Pioneer Executive V.P. said, "This is a unique
opportunity to merge the technology and management skills we have
developed in North America with our Argentine counterparts'
expertise to develop an area that has relatively untapped
reserves."
Four rigs are currently running in Argentina, and Pioneer expects
to drill 120 new wells with a capital budget of $100 million for
1998.
Contemporaneous with the closing of the transaction, Pioneer
refinanced all of Chauvco's outstanding debt through a new $290
million Canadian credit facility led by Canadian Imperial Bank of
Commerce, Royal Bank of Canada and The Bank of Nova Scotia.
Pioneer has also made certain amendments to its $1.4 billion
domestic credit facility in conjunction with this transaction.
Guy J. Turcotte, former Chairman and Chief Executive Officer of
Chauvco, and James R. Baroffio, a former Chauvco director, will
each join Pioneer's board of directors. Messrs. Turcotte and
Baroffio have extensive experience and successful track records as
builders of oil and gas companies and operations in other
countries.
With this closing, Pioneer has become the second largest
independent oil and gas exploration and production company in the
U.S., based on total proved reserves.
This announcement includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements include, without
limitation, estimates with respect to production levels, cash
flows, capital expenditures and revenue potential. Among other
things, such forward-looking statements assume limited changes in
oil and gas prices, costs of materials and service providers, and
the accuracy of engineering studies on reserves. Although Pioneer
believes that the expectations and assumptions reflected in such
forward-looking statements are reasonable, it can give no
assurance that such expectations and assumptions will prove to
have been correct. Such forward-looking statements and
assumptions are qualified as may be provided in Pioneer's annual,
quarterly, and current reports, and registration statements filed
with the Securities and Exchange Commission. |
