UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[X] Soliciting Material Pursuant to Rule 14a-12
BURLINGTON RESOURCES INC.
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(Name of Registrant as Specified in its Charter)
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The following is the text of a newspaper article published in the Houston
Chronicle on December 18, 2005, relating to the Company's proposed
transaction with ConocoPhillips.
A HOMETOWN MERGER
DEPARTING CEO SAYS DEAL PROVES COMPANY'S VALUE
COPYRIGHT 2005 HOUSTON CHRONICLE
When ConocoPhillips announced its acquisition of Burlington Resources early
last week, in a deal valued at more than $35 billion, it started the clock
ticking for Burlington Chairman and CEO Bobby Shackouls.
When the deal closes early next year, he'll retire from his full-time job
at Burlington Resources, where he will have worked for more than 12 years,
and take a seat on the ConocoPhillips board of directors.
Shackouls said the deal signals long overdue recognition for the company.
The firm has specialized in drilling for natural gas in some of the more
difficult geographic formations in North America, bringing so-called
unconventional gas to market at a time when the continent's easy-to-reach
resources are in decline.
"It's really gratifying for us to be able to get this kind of a deal,
because finally the marketplace recognizes the true value of the assets
we've put together and the teams we've put together to run them," he said.
A chemical engineer by training with stints at Exxon, Torch Energy Advisors
and Plains Resources, Shackouls talked with Chronicle reporter Tom Fowler
about the acquisition, his future and the future for his employees.
Q: How did this deal come about? Were you shopping the company around?
A: We did not shop the company. Jim Mulva (ConocoPhillips' CEO) and I have
been friends for a number of years and talked on and off about the
similarities of our philosophies toward the business. But the stars have
never been aligned because we felt like we were undervalued. Even though
we've benefited from higher commodity prices, I think the market has
recently begun to recognize the value of the business model we put in
place. As that occurred, Jim approached me and suggested we get together
and talk about a potential acquisition. Over the course of a couple of
months we were able to structure a transaction that made sense for both of
us.
Q: Was this a case where you didn't want to wait until a less-than-friendly
offer came around?
A: This is a consolidating business, and has been forever, and will
continue to be. So my view is if you can get to a point where the markets
recognize the true value of your company, it's better to be a leader than a
follower. Over the last three years, our shareholders enjoyed a return on
investment of 15 percent, then 31 percent and then 59 percent last year.
We entered this deal with a stock price of $43.50. ConocoPhillips offered
us $46.50 in cash and then their stock. So it allows our shareholders to
take money off the table in the form of cash and still get exposure to the
same exploration and production business we were already in. We also get to
accomplish some things we can't do as a smaller company. This includes
getting exposure to large international opportunities that require scale
and scope. We can't operate in places like Russia and Kazakhstan. This also
gives us exposure in a business we've never been in before, and that's as a
world-class refining and marketing operation.
Q: One thing that makes Burlington so attractive is its assets in
unconventional gas fields. How did you get into that business?
A: The cornerstone of our company has long been the San Juan Basin, and
that's where we created and crafted our business model. We started working
up and down the Rocky Mountain fairway this way, from the San Juan in the
south to Western Canada in the north.
We know there's a tremendous amount of gas in the rocks of the Rocky
Mountains, but they tend to be very, very tight and impermeable. So we have
to use modern technology in order to get at them, using new seismic
information, new drilling technology to do what I like to call
manufacturing gas from these technically challenging rocks. That's really
our business. We took the San Juan model to Canada in 1999, and now we're
one of the largest producers in western Canada. Canada has a whole lot more
running room than San Juan since it's a much less mature basin.
Q: Do prices need to stay where they are to continue to make unconventional
gas plays financially viable?
A: We're hopeful that by bringing on more and more of this gas, we can
replace the high-decline gas, and that gas lost to the hurricane, and bring
the price of the commodity back down. It doesn't take $13 to $15 gas to
support the economics of these types of projects.
What it really takes is the ability to drive costs out of the equation so
we can drive costs out of the manufacturing operations. Throughout the
Rockies we know the gas is there. It's not a matter of discovering it, but
how do you technically get it out of the ground in a cost-effective manner
where you can make a return for your shareholders?
Q: Is technology making the term "unconventional" irrelevant?
A: That will be the case in North America because of the maturity of the
basin. Working in these kinds of conditions is going to become much more of
the norm than what we were doing 20 to 25 years ago. There have been more
than 3 million wells drilled in this country, and there's not that much
white space left on the map. We have to take what's left.
Q: Clearly, job cuts are inevitable with the ConocoPhillips deal. The
companies mentioned in presentations there will be $375 million in
synergies and savings. Do you know what this will mean in terms of jobs?
A: For the $375 million, most of that is not aimed at head count but at
operational efficiencies, being able to optimize our exploration and
development portfolios to where we do the very best projects between the
two.
Clearly there will be savings between the two companies, for example we
don't need two CEOs, so I'll be leaving. But our hope is it has an impact
on as few people as possible. We're just now getting the teams in place to
address the questions of what we need to do for this combination, what we
are going to need going forward, who needs to go where, who needs to
transfer where.
Q: What do you want to tell Burlington employees as you get ready to move on?
A: They should take great pride in what they created here because it's very
unique. It's an unbelievable culture, and that's the sad part. We know that
culture will go away. But on the other hand, they have done something not
many people have done. It's my hope a large number of them will be given
opportunities they will enjoy for the rest of their careers.
Q: What will you do next?
A: I have agreed to be on the board of ConocoPhillips, and I'm looking forward
to that.
Exactly what the future holds for me I don't know yet. I'd like to get this
deal done and sit back and take a few months to figure out what to do next.
I'm on another company board (Kroger), so between the two of them it's
going to keep me pretty busy for a while.
But energy is all I know, so I'm afraid I wouldn't be of much use to anyone
else in any other industry.
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CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING
INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical and factual information contained herein,
the matters set forth in this filing, including statements as to the
expected benefits of the acquisition such as efficiencies, cost savings,
market profile and financial strength, and the competitive ability and
position of the combined company, and other statements identified by words
such as "estimates," "expects," "projects," "plans," and similar expressions
are forward-looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties that may
cause actual results to differ materially, including required approvals by
Burlington Resources shareholders and regulatory agencies, the possibility
that the anticipated benefits from the acquisition cannot be fully
realized, the possibility that costs or difficulties related to the
integration of Burlington Resources operations into ConocoPhillips will be
greater than expected, the impact of competition and other risk factors
relating to our industry as detailed from time to time in each of
ConocoPhillips' and Burlington Resources' reports filed with the SEC.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. Burlington Resources Inc.
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
ADDITIONAL INFORMATION
In connection with the proposed transaction, ConocoPhillips will
file a Form S-4, Burlington Resources will file a proxy statement and both
companies will file other relevant documents concerning the proposed merger
transaction with the Securities and Exchange Commission (SEC). INVESTORS
ARE URGED TO READ THE FORM S-4 AND THE PROXY STATEMENT WHEN THEY BECOME
AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING THE MERGER. Investors may
obtain a free copy of the Form S-4 and the proxy statement (when available)
and the other documents free of charge at the website maintained by the SEC
at www.sec.gov.
ConocoPhillips, Burlington Resources and their respective directors
and executive officers, may be deemed to be participants in the
solicitation of proxies from Burlington Resources' stockholders in
connection with the merger. Information about the directors and executive
officers of ConocoPhillips and their ownership of ConocoPhillips stock will
be set forth in the proxy statement for ConocoPhillips' 2006 Annual Meeting
of Stockholders. Information about the directors and executive officers of
Burlington Resources and their ownership of Burlington Resources stock is
set forth in Burlington Resources' proxy statement for its 2005 annual
meeting, which was filed with the SEC on March 10, 2005. Investors may
obtain additional information regarding the interests of such participants
by reading the Form S-4 and proxy statement for the merger when they become
available.
Investors should read the Form S-4 and proxy statement carefully
when they become available before making any voting or investment decision.