HOUSTON, Jan. 13 /PRNewswire/ -- Santa Fe Energy Resources (NYSE: SFR)
("Santa Fe") and Snyder Oil Corporation (NYSE: SNY) ("Snyder") today announced
the signing of a definitive agreement to merge the two companies. The new
company, Santa Fe Snyder Corporation, will be headquartered in Houston.
The combination of Santa Fe and Snyder creates an exploration and
production company with a market capitalization in excess of $1 billion and
estimated 1998 year-end reserves of approximately 310 million barrels of oil
equivalent (BOE). Combined production for 1999 is expected to be
approximately 110,000 BOE per day with 55 percent gas and 70 percent domestic.
The combined company has a superior record of growth both in the United States
and internationally and has a large exploitation inventory as well as a
substantial portfolio of exploratory prospects to continue that growth through
the drillbit. Based on combined three-year results including 1998,
260 percent of production was replaced (75 percent from drilling) at a cost of
finding and development of approximately $5.00 per BOE. The combined balance
sheet provides the scale and the financial strength to actively participate in
the industry's consolidation.
The Board of Directors for each company has unanimously approved the
transaction, recommends the merger and each director has committed to vote his
or her shares in favor of the merger. Snyder shareholders will receive
2.05 shares of Santa Fe common stock for each share of Snyder resulting in
Santa Fe shareholders owning approximately 60 percent of the outstanding
shares after the merger. The transaction is to be accounted for as a purchase
and is expected to be tax free to Snyder shareholders. John C. Snyder,
currently the Chairman and Chief Executive Officer (CEO) of Snyder will be the
Chairman of Santa Fe Snyder and James L. Payne, currently the Chairman and CEO
of Santa Fe will be the CEO of the new company. The eleven person board will
be composed of five members from Snyder's current directors and six from
Santa Fe.
John Snyder said, "We believe that this merger will add substantial value
for our combined shareholder base. Santa Fe's international program exposes
the Snyder shareholders to exceptional upside potential combined with near
term built-in growth. This transaction brings together two very successful
and well capitalized companies with complementary assets and skill sets. The
merger is expected to be accretive to discretionary cash flow per share for
both shareholder groups from the outset."
Jim Payne said, "Santa Fe Snyder will have the scale, diversity of
operations and financial strength to become one of the very top independent
exploration and development companies in the world. Snyder offers a
substantial North American gas resource with upside potential which has been a
strategic goal for Santa Fe. We intend to take advantage of the current
conditions in the energy industry to opportunistically pursue acquisitions of
high quality assets worldwide."
Santa Fe Snyder will have significant core areas in the Rocky Mountains,
Permian Basin and Gulf Coast regions of the United States as well as in South
America, West Africa and Southeast Asia. The company will grow through the
exploitation of its combined domestic asset base and the ongoing development
of significant international discoveries. In addition, the company will be
exposed to substantial upside potential through continuation of its successful
high impact exploration programs. Management also expects to reduce costs by
$20 million in the first full year of operations through the elimination of
duplicate corporate overhead in addition to efficiencies created by the
combination of the Gulf of Mexico operations.
Each of the companies has a strong track record with regard to consistent
production and reserve growth. On a combined basis the companies achieved in
1998 an average production of approximately 101 thousand BOE per day, a
20 percent increase over 1997 excluding the corporate dispositions in 1997 by
each company. Combined reserves at yearend are estimated to be approximately
310 million BOE, representing reserve replacement of almost 300 percent. The
combined companies have a three -year blended finding and development cost of
approximately $5.00 per BOE having added over 250 million BOE in the last
three years.
On January 27, Santa Fe intends to announce its full year financial
results for 1998. Santa Fe estimates that its reserves as of January 1, 1999
will be approximately 210 million BOE, representing a replacement ratio of
255 percent. For the year, production is estimated to be approximately
70 thousand BOE per day, an 18 percent increase over 1997, excluding the
distribution of Monterey Resources. Due to the low commodity price
environment, Santa Fe expects to take an impairment charge of up to
$100 million primarily in Santa Fe's Gulf of Mexico division.
On February 11, Snyder is scheduled to announce its full year financial
results. The Company estimates that January 1, 1999 reserves will be
approximately 100 million BOE, representing a replacement ratio of almost
400 percent. For the year, production is estimated to be approximately
31 thousand BOE per day, a 25 percent increase over 1997 excluding the sale of
Patina Oil and Gas Corporation.
Combined Company Highlights
Financial
-- Total enterprise value of approximately $1.6 billion
-- Equity market capitalization of approximately $1.1 billion
Operational
-- Total proved reserves approximately 310 million BOE
-- Total estimated 1999 production approximately 110 thousand BOE per day
Estimated Reserves and Production Data
Santa Fe Snyder Combined
1998 Proved Reserves (million BOE)
Domestic 101.0 100.0 201.0
International 109.0 --- 109.0
Total 210.0 100.0 310.0
1998 Estimated Production (thousand BOE/D)-
Domestic 46.0 31.0 77.0
International 24.0 --- 24.0
Total 70.0 31.0 101.0
Transaction Summary
Combined company name - Santa Fe Snyder Corporation
Exchange ratio - 2.05 Santa Fe: 1 Snyder
Equity split - Santa Fe 60 percent, Snyder 40 percent
Estimated shares outstanding - 170.5 million
Accounting - Purchase method
Donaldson, Lufkin & Jenrette Securities Corporation and Chase Securities,
Inc. acted as financial advisors to Santa Fe, and Petrie Parkman & Co. acted
as financial advisor to Snyder.
The transaction is subject to shareholder approvals, expiration of the
Hart-Scott-Rodino waiting period and other customary closing conditions and
regulatory approvals. Completion of the merger is expected in the second
quarter of 1999.
The issuance of Santa Fe stock in the merger will be made only by means of
a prospectus.
Santa Fe is a worldwide oil and gas exploration and development company
with domestic operations in the Permian basins of West Texas and Southeast New
Mexico, the Gulf of Mexico and international activities in Indonesia,
Argentina, Gabon, China, Brazil, Cote d'Ivoire, Malaysia and Ghana. Santa Fe
is listed on the New York Stock Exchange under the ticker symbol SFR.
Additional information is available on Santa Fe's Web site at
http://www.sfer.com.
Snyder Oil Corporation is engaged in the production, development,
acquisition and exploration of domestic oil and gas properties, primarily in
the Gulf of Mexico, the Rocky Mountains and northern Louisiana. Snyder also
has investments in two international exploration and production companies,
SOCO International plc and Cairn Energy plc. Snyder's shares are traded on
the New York Stock Exchange under the symbol SNY. Additional information is
available on Snyder's Web site at http://www.snyderoil.com.
Contacts: Santa Fe Energy Resources
Kathy E. Hager
713-507-5315
Snyder Oil Corporation
Rodney L. Waller
817-882-5937
This press release includes "forward looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' plans, synergies, expectations and objectives for future
operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that the companies expect, believe or anticipate will or may occur in the
future are forward looking statements. This includes completion of the
proposed merger, reserve estimates, future production of oil and gas, future
financial performance and other matters. These statements are based on
certain assumptions, which the companies believe are reasonable, but which are
subject to a wide range of uncertainties and business risks. Factors that
could cause actual results to differ materially from those anticipated are
discussed in both companies' periodic filings with the Securities and Exchange
Commission, including their Annual Reports on Form 10-K for the year ended
December 31, 1997.
SOURCE Santa Fe Energy Resources
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Related links:
http://www.sfer.com
CONTACT:
Kathy Hager of Santa Fe Energy Resources,
713-507-5315
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