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China Wants Unocal Corporation


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Hi everyone. I just wanted to get your feelings of what is happenning with China's bid to purchase an important American resource. How can we let Unocal get sold to a a country that is already a major threat to our economy. What is the Bush administration's plan? They have none." Here is the latest release from Unocal.

 

El Segundo, Calif., June 23, 2005 - Unocal Corporation (NYSE: UCL) announced today that it has received a waiver from Chevron Corporation enabling Unocal to engage in discussions with CNOOC Limited and its representatives concerning a transaction proposed by CNOOC Limited at any time until the date of the Unocal stockholder vote on the proposed merger with Chevron.

 

The date of the Unocal stockholder meeting has not yet been set.

 

Unocal intends promptly to commence such discussions with CNOOC Limited. There can be no assurance that any agreement with CNOOC Limited will be reached. In connection with entering into the Chevron merger agreement, the Unocal board of directors recommended the transaction to Unocal stockholders. That recommendation remains in effect.

 

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal oil and gas activities are in North America and Asia.

 

Here is the latest release from CNOOC

 

On June 23, 2005, CNOOC Limited (NYSE: CEO) announced that it has proposed a merger with Unocal Corp (NYSE: UCL). In a letter sent to the Chairman of Unocal, CNOOC Limited Chairman and CEO, Mr. Chengyu Fu stressed that the approach is friendly and the company is seeking a consensual transaction with Unocal. This proposal is being submitted in accordance with the sale process initiated by Unocal.

 

CNOOC's offer provides a premium for Unocal's shareholders of $1.5 billion over Chevron's offer based on Chevron's closing price on the NYSE on June 21, 2005.

 

Strengths and opportunities

 

CNOOC believes that the merged group would benefit greatly from the companies' complementary strengths.

 

    * Platform for growth: This combination is expected to more than double CNOOC's production and increase reserves by nearly 80%. CNOOC believes that Unocal has an attractive portfolio of development projects with a substantial growth profile.

 

    * An Asia-focused energy company: Both companies are already primarily Asian businesses - together they will be a leader in one of the fastest growing regions in the world. It is estimated that 85% of the combined reserves of the companies are located in Asia and the Caspian region.

 

    * A leading regional gas business: Sixty percent of Unocal's reserves are natural gas (mostly in Asia). CNOOC currently has 35% of its reserves in gas; it is estimated that the combined company will have a more balanced portfolio with reserves of 53% oil and 47% natural gas. CNOOC believes that an improved oil and gas balance will reduce its exposure to commodity price cyclicality.

 

      CNOOC believes that China's LNG market potential will allow it to accelerate the exploration and development of gas resources and position it as a long-term supplier to the Bontang LNG plant. This is an important part of the environmental drive to promote cleaner burning fuels.

 

    * Optimizing investment programs: CNOOC expects to generate considerable synergies from the optimization of the combined exploration and capital investment programs of the two companies.

 

    * Proven management and world-class technical expertise: CNOOC believes that Unocal has an excellent operational management team, and CNOOC can also draw on Unocal's deepwater drilling and production expertise.

 

The transaction is expected to be EPS and cash flow accretive in the first full year after completion, and we have a financial structure that should ensure we maintain a strong, investment-grade credit rating. The transaction also gives us the opportunity to optimize a combined exploration budget.

 

Commitments

 

CNOOC is committed to preserving Unocal's U.S. assets and fully integrating its strong management team and workforce into the combined company. The transaction will not adversely affect the U.S. oil and gas market since Unocal's U.S. oil and gas production will continue to be sold in the U.S. and, in any event, accounts for less than 1% of total U.S. oil and gas consumption. To this end, CNOOC has agreed to make the following assurances in connection with this offer:

 

    * CNOOC is willing to continue Unocal's practice of selling and marketing all or substantially all of the oil and gas produced from Unocal's U.S. properties in U.S. markets.

 

    * CNOOC will seek to retain substantially all Unocal employees, including those in the U.S. This is in contrast to the existing Chevron proposal where Chevron has already announced plans to extract hundreds of millions of dollars of cost savings from the merger annually, including from employee layoffs.

 

    * CNOOC hopes and will endeavor to persuade members of Unocal's executive and operational management to join the management team of the combined company.

 

    * CNOOC will accept and agree to the terms of Unocal's recent FTC settlement relating to its patent rights in reformulated gasoline.

 

    * CNOOC is confident that it will obtain Exon-Florio approval. To this end, CNOOC is willing to divest or take other actions with respect to any of Unocal's non-E&P assets in North America to the extent such divestitures and actions would not give rise to a material adverse effect on Unocal, including considering special management arrangements for Unocal's U.S. non-controlling, minority pipeline interests and its storage assets.

 

I hope this does not send our country down the drain.

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Guest Chevron Corporate

Chevron Corporation has issued the following statement in response to the unsolicited offer for Unocal Corporation by CNOOC Limited, an affiliate of China National Offshore Oil Company (CNOOC), one of China’s government-controlled national oil companies:

 

Chevron stands behind its April 4, 2005, merger agreement with Unocal, which has been approved by the boards of both companies. The Chevron/Unocal agreement combines compelling value, regulatory certainty and accelerated timing, providing a superior transaction for Unocal stockholders. We note today that Unocal publicly affirmed that its board continues to recommend the Chevron transaction.

 

Chevron’s combination of cash and stock allows Unocal stockholders the opportunity to realize a premium on their investment in Unocal, while continuing their participation in the oil and gas sector through a leading global energy company. Unocal’s assets are a superb fit with Chevron’s operations and capabilities, creating long-term investment value for stockholders.

 

A transaction with Chevron is highly likely to close, while the CNOOC proposal must undergo an extensive regulatory process in the United States and elsewhere.

 

Chevron and Unocal are substantially finished with the regulatory process, having already received clearance to proceed from the Federal Trade Commission (FTC) and nearing completion of the process to enable a vote by Unocal stockholders expected in early August. To enable the vote to proceed, Unocal has set June 29, 2005, as its stockholder record date. Chevron is strongly committed to seeing its agreement through to the Unocal stockholder meeting and closing.

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Guest Lee Raymond

It would be a mistake for the U.S. Congress to interfere with any potential bid by CNOOC. He said a move by the U.S. government to limit such a deal with a Chinese company could come back to haunt U.S. companies looking for business abroad.

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