Tulsa-based Vintage deal expected to close today: Los Angeles-based

Journal Record, The (Oklahoma City), Jan 30, 2006 by Jerry Shottenkirk

Occidental Petroleum of Los Angeles is expected today to complete its merger with Tulsa-based Vintage Petroleum.

Late last week Vintage shareholders approved the merger and Vintage will become a subsidiary of Occidental.

Occidental originally announced in October its plans to buy Vintage. The selling price was $3.8 billion and Tulsa reportedly stands to lose about 230 jobs. Occidental officials said they did not plan to keep the Vintage office.

Pavel Molchanov, an industry analyst with Raymond James and Associates of Houston, said investors of both companies should be satisfied in the end.

It's a good deal for both, Molchanov said. Vintage is in many of the same areas as Occidental, specifically in California, Latin America and the Middle East. The integration of those assets is low risk. The second thing Occidental gets is that both have similar and substantially oil-weighted businesses and they have similar growth strategies.

The approval of the deal by Vintage stockholders went over without a hitch last week. Some 55 million shares, or 99.9 percent of the shares represented, voted for the merger.

Vintage stockholders will gain 0.42 shares of Occidental common stock and $20 cash for each Vintage share of common stock they own. That represents a 33 percent increase.

Vintage stockholders are getting a fairly sizable premium, Molchanov said.

Vintage Chairman and Chief Executive Officer Charles C. Stephenson Jr. said Vintage was attractive in many areas.

Vintage's mix of domestic and international assets is complementary to Occidental's existing portfolio of domestic and international opportunities and enhances the competitive ability of the combined company, Stephenson said. In addition, the structure of this transaction allows Vintage shareholders to realize immediate and potentially continuing value through the blend of cash and stock.

Stephenson founded Vintage in 1983, was president from 1983-90, was named chief executive officer from 1987-94 and was voted in as CEO and president in February 2004.

Occidental officials said they were lured mostly by Vintage's activities in Argentina, site of half of the company's reserves.

Vintage Petroleum is an excellent strategic fit for Oxy, adding to our core areas in California, the Middle East and Latin America, said Dr. Ray R. Irani, chairman, president and chief executive officer of Occidental Petroleum Corp. We hope to double Vintage's production from Argentina within five years as well as increase production from California by up to 20 percent over the next few years. Vintage produces 76,000 barrels of oil equivalent per day.

Vintage shares closed Friday at $58.25, up 62 cents, while Occidental shares increased to $91.21, up 1.76 percent.