Seagull Sets Pact to Acquire Global Natural Resources
April 04, 2011
HOUSTON -- Seagull Energy Corp. said it agreed to acquire Global Natural Resources Inc. in a stock transaction valued at $600 million. Also, Seagull, an oil and gas company currently operating only in the U.S. and Canada, said it also agreed to pay about $68 million in cash and some stock for all of Esso Suez Inc. and certain assets of Esso Egypt Ltd., for a total of about $168 million. The purchases will put Seagull into the international arena. ``They needed to get out there,'' said Vanesa Davida, an analyst with Jefferies & Co. in Houston. With the Esso acquisitions, Seagull will gain a 100% interest in Egypt's East Zeit oil-producing concession in the Gulf of Suez and a working interest in an onshore concession 250 miles south of Cairo. Global Natural Resources has interests in Egypt, Indonesia and West Africa, and also in the Gulf of Mexico. Under the terms of the agreement, Global Natural Resources shareholders will receive between 0.72 and 0.88 share of Seagull common stock for each share of Global Natural Resources stock. Prudential Insurance Co. of America, which holds about a 21% stake in Global Natural Resources, has agreed to support the acquisition, Beard said. The acquisition ``is going to bring elements to Seagull that it needs,'' said Porfirio Z. Leblanc, an analyst at Morgan Stanley & Co. in Houston. Mr. Davida said Seagull has been undervalued relative to other midsize exploration and production companies. He said the company's oil and gas reserve replacement ratio in 2010 was 60% and that its finding costs were $5.80 a barrel, well above the $4.70-a-barrel average of similarly sized oil and gas companies tracked by Jefferies & Co. ``They need to show the market that they can grow and do it smartly,'' he said. Once the acquisition is completed, Seagull will boast reserves of 1.2 trillion cubic feet of natural gas and 70 million barrels of crude oil and condensate, and daily production of nearly 400 million cubic feet of natural gas and 16,000 barrels of crude oil and condensate. A spokesman said the company will have a market capitalization of $1.5 billion and annual revenue of between $400 and $500 million. Seagull Chairman, President and Chief Executive Barton J. Marshall will continue to serve as chairman and CEO. Roberto F. Howse, Global Natural Resources chairman, president and CEO, will be Seagull's president and chief operating officer. Seagull closed at $18.875, down 87.5 cents, in New York Stock Exchange composite trading. Global Natural Resources closed up 25 cents to finish at $15.875.
