FOR IMMEDIATE RELEASE
MARCH 16, 2000
13/00
BP AMOCO ADVANCES CONSTRUCTIVE
DISCUSSIONS WITH FTC
BP Amoco chief executive Sir John Browne said today that the company was at an
advanced stage in "constructive" discussions with the US Federal Trade
Commission (FTC) on its proposed combination with Atlantic Richfield Co (ARCO)
and was hopeful of a successful outcome "within a matter of weeks".
Following an earlier announcement in Alaska that BP Amoco and ARCO is to sell
ARCO's Alaskan businesses to Phillips Petroleum for $7 billion, Browne today
disclosed an agreement to sell ARCO's interests in the Cushing storage terminal,
together with various pipeline interests, to TEPPCO Partners, of Houston, for
$355 million.
"With these major disposals we believe we have addressed the anti-trust concerns
of the FTC. We now hope we can move forward in the coming weeks towards
obtaining a consent order allowing us to close the ARCO combination and deliver
the significant synergies of the deal to the shareholders of the combined
company."
Speaking at a presentation to financial analysts in the US and UK, Browne said
that, subject to completion of the ARCO deal, BP Amoco had also today advised
the board of Vastar Resources Inc. of the intention to make a tender offer for
the minority stockholding of the company at $71 a share. ARCO already owns some
82 per cent of Vastar, one of the largest independent oil and gas producers in
the US.
Browne told the analysts that, subject to approval at BP Amoco's annual general
meeting next month, the company intended to embark on a rolling programme of
share buy-backs in the US and UK financial markets, beginning early May.
He said he expected the synergies from ARCO to be better than originally
estimated when the deal was announced in April last year. "At the time, we
envisaged annualised pre-tax savings and synergies of around $1 billion, of
which $200 million would be from Alaska.
"Even after disposing of ARCO's Alaskan interests, we believe we can still
deliver $1 billion in savings. The make-up of the savings have shifted but we
are absolutely confident of the total because the work we've done since last
April has shown the potential from within the continuing ARCO businesses,
including Vastar."
Browne said the oil price had risen sharply and ARCO's financial position had
improved markedly since the combination was first agreed, with capital spending
of $2.7 billion in the interim and much lower gearing than expected a year ago,
both factors which would significantly benefit the combined company.
He said the combination with ARCO promised a "massive boost" to BP Amoco's
growth strategy, giving the company a coast-to-coast refining and marketing
presence in the US and increasing its oil and gas reserves by some 2.7 billion
barrels of oil equivalent. The company's gas and liquids production would
increase by over 700,000 barrels a day of oil equivalent, including the addition
of 125,000 barrels a day to its UK North Sea production and 360,000 barrels a
day - half of it gas - in the US Lower 48 and the Gulf of Mexico, mainly from
ARCO's stake in Vastar.
In addition, it would add unbooked gas volumes of some 15 trillion cubic feet in
Thailand, Malaysia, the South China Sea, Qatar, and Indonesia where ARCO has a
net share of up to eight trillion cubic feet in the Tangguh field, regarded as
the most competitive future liquefied natural gas project to supply the growing
demands of the Far East.
"This will give us a powerful platform for upstream growth in Asia, with
world-class volumes ready to supply Japan, Korea and other key markets now
recovering fast from recession," Browne said.
The combination would also add interests to BP Amoco's portfolio in Algeria,
Venezuela, the Caspian and in Russia where ARCO has an eight per cent stake in
Lukoil.
"In the downstream we are acquiring a great set of assets on the US West Coast
where demand has grown by 1.5 per cent a year through the 1990s. For the first
time, we will also have a coast-to-coast presence in marketing and refining in
the US."
Concluding his remarks to the analysts, Browne said: "We start with a strong
base, from which we are determined to grow. We've integrated BP and Amoco over
the last 15 months, with huge gains in productivity and early achievement of the
synergies we had targeted.
"We're making an agreed bid for Burmah Castrol which will bring new strengths in
some very interesting markets and now we are hopeful of completing the ARCO
transaction in the near future.
"We have a new focus in some key areas of growth such as the deepwater Gulf of
Mexico, the Caspian and the global gas business. Today's announcements add to
that growth potential in a very significant way and they also reinforce the
commitment we've made to combine growth with the discipline of ongoing
performance."
The offer for Vastar has not yet commenced. This press release does not
constitute an offer to buy any securities. Any offer will be made pursuant to a
tender offer statement to be filed with the Securities and Exchange Commission.
Vastar shareholders are advised to read the tender offer statement when it is
available because it will contain important information relating to the offer.
Shareholders will be able to obtain the tender offer statement and other filed
documents for free at the Internet website maintained by the Securities and
Exchange Commission at www.sec.gov. In addition, BP Amoco will make the tender
offer statement available for free to Vastar's shareholders.
Statements made in this press release, particularly those regarding savings,
demand, gearing, growth, margins, performance, productivity, production,
strategy, synergies, strengths, volumes, BP/ Amoco merger effects, the proposed
ARCO combination and its effects, are or may be forward looking statements and
actual results may differ materially from those expressed or implied in such
statements. Information concerning
factors that could cause actual results to differ materially from those in the
forward looking statements are contained in BP Amoco's latest published annual
report and accounts and in BP Amoco's latest published report on Form 20F filed
with the US Securities and Exchange Commission.
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