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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
PENNACO ENERGY, INC.
(Name of subject company (issuer))
MARATHON OIL ACQUISITION 1, LTD.,
a wholly owned subsidiary of
MARATHON OIL COMPANY,
a wholly owned subsidiary of
USX CORPORATION
(Names of filing persons (offerors))
COMMON STOCK, PAR VALUE $.001 PER SHARE
(INCLUDING THE ASSOCIATED COMMON SHARE PURCHASE RIGHTS)
(Title of class of securities)
708046107
(CUSIP number)
WILLIAM F. SCHWIND, JR.
MARATHON OIL COMPANY
5555 SAN FELIPE ROAD
HOUSTON, TEXAS 77056-2723
(713) 629-6600
(Name, address and telephone number of person authorized
to receive notices and communications on behalf of filing persons)
Copy to:
R. JOEL SWANSON, JR.
BAKER BOTTS L.L.P.
3000 ONE SHELL PLAZA
910 LOUISIANA
HOUSTON, TEXAS 77002-4995
(713) 229-1234
CALCULATION OF FILING FEE
Transaction Valuation Amount of Filing Fee
--------------------- --------------------
Not Applicable Not Applicable
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
[x] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[x] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
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For Immediate Release
Contacts: ROGER HOLLIDAY OR
Susan Landreneau
Marathon Oil Company
(713) 296 - 3915
Paul M. Rady
Pennaco Energy, Inc
(303) 629 - 6700
Glen C. Warren, Jr.
Pennaco Energy, Inc.
(800) 672 - 9111
MARATHON OIL COMPANY TO ACQUIRE PENNACO ENERGY
HOUSTON AND DENVER, DECEMBER 22, 2000 -- Marathon Oil Company, part of the
USX-Marathon Group (NYSE: MRO), a unit of USX Corporation; and Pennaco Energy,
Inc. (AMEX: PN), announced today that they have signed a definitive merger
agreement under which Marathon will acquire for cash all the outstanding common
shares of Pennaco for $19.00 a share in a transaction valued at approximately
$500 million, including net debt of $54 million. The Boards of Directors of
both companies approved the agreement. Lehman Brothers acted as financial
advisor to Pennaco in connection with the transaction.
In accordance with the merger agreement, Marathon expects to commence a cash
tender offer on or about January 8, 2001 for 100 percent, but not less than a
majority, of the outstanding Pennaco shares on a fully diluted basis. If a
majority of the outstanding shares are purchased in the tender offer, any
remaining Pennaco shares will be exchanged for cash in the amount of $19.00 per
share in a merger of Pennaco and Marathon's acquisition subsidiary. The
transaction is subject to customary conditions.
Headquartered in Denver, Pennaco was founded in 1998 and is entirely focused on
the production of coal bed methane gas (CBM) from the Powder River Basin,
located in northern Wyoming and southern Montana. The company is one of the
largest leaseholders in this play with over 400,000 net acres and current net
production of over 50 million cubic feet of natural gas per day. Net proven
reserves are estimated at approximately 200 billion cubic feet, with over 800
billion cubic feet of upside potential. Marathon estimates that the ultimate
acquisition and development costs of the proven, plus probable reserve base
will be around $4.50 per barrel of oil equivalent.
"Much of the growing global demand for energy will be met by natural gas, and
this is particularly the case for the United States where growth in electric
power generation is a prime driver," said Marathon President, Clarence Cazalot.
"The North American gas market is a core area for Marathon, and this
acquisition will enhance our already strong presence. Its assets will provide a
significant new reserve base that we can develop and deliver quickly to the
marketplace." Cazalot added: "Pennaco is a well run, highly regarded company
with an entrepreneurial spirit and is a great strategic fit with our growing
North American gas business. The shallow, more rapidly drilled CBM wells will
complement our focus in Oklahoma on deeper, higher productivity wells and
result in a more balanced portfolio of growth opportunities."
Paul M. Rady, Chairman, President and Chief Executive Officer of Pennaco
stated, "Marathon's tender offer reflects the proven and potential value of
Pennaco. Over the past two and one-half years Pennaco's management team and
employees have made outstanding progress in building and developing our
position in the Powder River Basin coal bed methane play. We are very
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proud of our company's accomplishments and believe that it is Pennaco's growth
potential that has attracted an outstanding company like Marathon to our
organization."
Marathon Oil Company is one of the largest fully integrated oil firms in North
America. It is engaged in the worldwide exploration and production of crude oil
and natural gas and through Marathon Ashland Petroleum LLC, refines, markets
and transports petroleum products in the United States.
# # #
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offer will be made only through an Offer
to Purchase and related Letter of Transmittal. Investors and security holders
are strongly advised to read both the tender offer statement and the
solicitation/recommendation statement regarding the tender offer referred to in
this press release, when they become available, because they will contain
important information. The tender offer statement will be filed by USX
Corporation, and Marathon Oil Company with the Securities and Exchange
Commission (SEC), and the solicitation/recommendation statement will be filed
by Pennaco Energy, Inc. with the SEC. Investors and security holders may obtain
a free copy of these statements (when available) and other documents filed by
USX Corporation, Marathon Oil Company and Pennaco Energy, Inc. at the SEC's
website www.sec.gov. The tender offer statement and related materials may by
obtained for free by directing such requests to USX Investor Relations at (212)
826-8418. The solicitation/recommendation statement and such other documents
may be obtained for free by directing such requests to Pennaco Energy, Inc. at
1050 17th Street, suite 700, Denver, Colorado 80265, telephone: (303) 629-6700.
This release contains forward-looking statements with respect to completion of
the acquisition, estimated proven reserves, potential additional reserves and
the presently expected development costs. This forward-looking information is
based on certain assumptions, including, among others tender by Pennaco
shareholders, presently known physical data concerning size and character of
reservoirs, economic recoverability, future drilling success, production
experience, industry economic conditions (such as supply and demand), levels of
company cash flow from operations and operating conditions. This forward
looking information may prove to be inaccurate and actual results may differ
significantly from those presently anticipated. In accordance with "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, USX
has included in its Annual Report Form 10-K for the year ended December 31,
1999, cautionary language identifying other important factors, though not
necessarily these such factors, that could cause future outcomes to differ from
those set forth in forward-looking statements.
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