sohio acquires british petroleum's u.s ... - sohio-british petroleum merger-2 bp (alaska), a...
TRANSCRIPT
SOHIO NEWS SERVICE
Midland Building- .Cleveland,Ohia 44115
(216) 575-554506/0269 - 1
For Immediate Release
SOHIO ACQUIRES
BRITISH PETROLEUM'S U.s. SINCLAIR PROPERTIES
CLEVELAND, Ohio, June 2 -- BP Oil Corporation, the principal
United States subsidiary of the British Petroleum Company, Limited,
will be merged into The Standard Oil Company (Ohio). Included in the
BP Oil Corporation properties that Sohio will acquire in the merger
are BP's acreage in the Prudhoe Bay area on the Alaskan North Slope
and the marketing, refining and pipeline properties which BP purchased
earlier this year from Atlantic Richfield Company at the time of the
merge~ of Atlantic Richfield and Sinclair Oil Corporation.
Sohio'President~ Charles E. Spahr, announced that the Boards of
Directors of both Sohio and BP have approved the contemplated
transaction in principle, subject to preparation of a definitive
agreement. The terms of the merger provide that British Petroleum will
receive stock equal to a 25 per cent interest in Sohio which will be
converted into additional Sohio stock'as production is realized from
the Prudhoe Bay area.
The Prudhoe Bay oil field was discovered last year. Wells drilled
by Atlantic Richfield and Humble Oil Company are generally thou~~~ to
have indicated the existence of extensive oil reserves. BP's Prudhoe
Bay acreage is adjacent to the acreage held by Atlantic Richfield and
Humble. BP announced on March 13, 1969, that its first well
discovered oil in the porous sandstone below 8,000 feet. It is not
expected that Alaskan crude oil will reach market before mid-1972.
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Sohio-British Petroleum Merger-2
BP (Alaska), a wholly-owned subsidiary of British Petroleum, which is
presently the operator of the Prudhoe Bay leases, responsible for
exploration and development in Alaska, will be employed by Sohio to
continue such activities.
Sohio will also receive in the merger BP's mineral acreage in
areas in Alaska other than Prudhoe Bay and its producing properties in
California and offshore Louisiana.
BP's marketing and refining properties - prinqipally, "Sinclair"
properties - were purchased from Atlantic Richfield for $400 million
and consist of retail gasoline outlets located in the 16 eastern states
stretching from Maine to Florida; over 450 bulk plants; 44 terminals,
and related transportation faci~ities. They also include two
refineri~s, one of over 100,000 barrels per day capacity located at
Marcus Hook, Pennsylvania, and the other of some 85,000 barrels per day
capacity located at Port Arthur, Texas. Mr. Spahr indicated that Sohio
wishes to utilize existing personnel in connection with the combined
operation.
BP will retain the $400 million debt owed to Atlantic Richfield
for ~hese properties. Sohio will be responsible for costs related to
development of the Alaskan properties, to operation of the marketing
and refining properties, and to BP's participation in construction of
the proposed Trans-Alaska Pipeline System.
British Petroleum will initially receive non-dividencl. beari.ng
stock of Sohio, which will have voting rights equival~nt to a 25 per
cent stock interest. This stock will be converted into regular
dividend bearing Sohio Common Stock when oil production (net of
royalty) from BP's Prudhoe Bay acreage reaches 200,000 barrels per day
Sah·o-British Petroleum Merger-~
or on January 1, 1975, whichever occurs first. The stock will also be
convertible into additional Sohio Common Stock based on the sustainable
rate of production which may be achieved prior to January 1, 1978 out
of BP's Prudhoe Bay acreage. Such additional common stock, when added
to British Petroleum's initial 25 per cent stock interest, is designed
to provide British Petroleum with an interest in Sohio shown by the
following schedule:
Production Net of Royalty(Barrels per Day)
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
British Petroleum'sCommon Stock Interest
in Sohio
34%
37%
40%
43%
46%
51%
52%
53%
54%
Net production in excess of 600,000 barrels per day will not earn
any further stock interest in Sohio. British Petroleum will retain a
75 per cent net profit interest in production from the Prudhoe Bay
leases in excess of production levels used for computing its st0~k
interest in Sohio and also in production from BP's other Alaskan
properties.
The consummation of the transaction is contingent upon the
approval of Sohio stockholders, which will be sought at a special
meeting.