ConocoPhillips to buy Burlington in $35.6 billion deal

Global oil major ConocoPhillips agreed to buy Burlington Resources Inc., a major independent producer of natural gas, in a cash-and-stock deal worth $35.6 billion, making a huge bet that natural gas will remain lucrative over the long term. The deal would bring the number-three U.S. oil company's revenues within striking distance of the U.S. number two, Chevron Corp. Together, ConocoPhillips and Burlington Resources will have "proforma" reserves of about 10.5 billion barrels of oil equivalent, according to company records as of December 31, 2004. "Proforma" 2005 production will total about 2.3 million barrels of oil equivalent per day.

The deal enhances ConocoPhillips's production growth and North American gas supply in the near-term, through projects involving conventional and unconventional resources, and in the long-term through liquefied natural gas and Arctic gas projects. Shares across the natural gas sector jumped during the day on speculation that other gas producers could become attractive takeout targets.

Adding Burlington to its portfolio boosts ConocoPhillips's natural gas production at a time when the fuel is pushing record high prices of $15 per million British thermal units (mmBtu). Prices on the NYMEX remain about $10 per mmBtu for delivery through the spring of 2007, an indication that markets expect gas to remain costly for the foreseeable future.

(2005-12-13 14:43:58 SGT) [Energy] Permalink

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