Tulsa-based Samson Investment Co. offers $46M for Denver energy firm

Journal Record, The (Oklahoma City), Mar 21, 2007 by Kirby Lee Davis

Samson Investment Co. offered $46 million Tuesday for Pyr Energy Corp. of Denver.

That cash tender offer amounts to $1.21 a share, down from $1.23 presented to Pyr's board on Jan. 26. Even so, it represents a 17- percent premium over Pyr's $1.03 close Tuesday. The stock rose 7 cents in after-hours trading.

On Jan. 26, Tulsa-based Samson made its first overture to the oil and gas exploration company, its price 29 percent above the stock's 94-cent trading level. At the Pyr board's request, on Feb. 21 Samson made an alternative proposal to offer the same price just for Pyr's Jefferson County, Texas, properties.

Their failure "to make meaningful progress" with the Pyr board on either offer led to Tuesday's revised tender offer, said Samson Executive Vice President C. Philip Tholen.

"We believe that the Pyr stockholders should have the option to choose a transaction providing them with the greatest value," he said, "and this offer will provide them the opportunity to make their views known."

In Tuesday's letter to Pyr management, Tholen attributed the lowered price to the "excessive level" of Pyr's overhead, its "unnecessary incremental fees and expenses" in its sales process, Pyr's increased stock options and the $775,000 sale of Pyr's Ryckman Creek properties, which Tholen said was substantially below the value Samson used in its initial offer.

Samson's latest offer could change again depending on the results of Nome-Harder No. 1 well, which Samson operates in Jefferson County, Texas. As Pyr owns a 4.16-percent working interest in the well, Samson factored it into its tender offer price.

The well should be logged, and perhaps even completed, before the expiration of the tender offer.

Samson will finance this move from working capital. It foresees no regulatory roadblocks in this deal.

"Elimination of the principal obstacles to completion of this transaction are solely in the control of the Pyr board of directors," Tholen said in his letter to the Pyr board. "Once Pyr removes these impediments, we are confident that the transaction will be quickly consummated."

Those obstacles include Pyr's board neutralizing its shareholder rights plan adopted at the end of January and exempting the deal from Maryland's anti-takeover statutes. It also must accelerate the maturity date of $7.3 million in convertible promissory notes.

Following the tender offer, Samson said it intends to consummate a second-step merger, giving all remaining Pyr stockholders the same cash price.

Pyr's exploration activities focus on select areas in the Rocky Mountains, Texas, and the Gulf Coast.

In fiscal 2006 ended Aug. 31, Pyr revenues rose 69 percent to $10.3 million, giving it a net income of $2.3 million. The company claimed $6.3 million in cash and $28.7 million in total assets.

Pyr ended its first fiscal quarter with 37.9 million common shares outstanding.

Privately held Samson claims to be one of the top 20 independent exploration and production companies in the nation, with operations across 28 geologic provinces in 16 states, Canada and the Gulf of Mexico. Its international and offshore divisions based in Houston have pursued ventures from Latin America and Australia to Southeast Asia and the North Sea, leading to establishing an office in Aberdeen, Scotland.