PSA Agrees to Buy Control of Oil Company
PSA Inc., seeking to significantly increase its energy holdings, Tuesday said it had agreed to acquire a majority interest in Statex Petroleum, a Texas-based oil and gas exploration and production company with proven reserves of 6.4 million barrels.
The San Diego-based parent of Pacific Southwest Airlines, which already owns proven reserves in the oil and gas business of 8.7 million barrels, said it plans to purchase 52.1% of Statex’s 2.9 million shares of common stock and 61.5% of its 250,000 preferred shares.
PSA would not disclose a purchase price. However, given Statex’s Tuesday closing prices, the proposed purchase could be worth at least $17.6 million.
The stock is now owned by CalMat Co., a Los Angeles-based cement products supply company. A Statex spokesman said Tuesday that there are no other shareholders with significant holdings in the company.
In the past few years, PSA has invested nearly $100 million to develop its oil and gas business, according to George M. Shortley, senior vice president and chief financial officer. Shortley described those holdings as mainly “a financial investment” but added that PSA would be “prudent to add to our expertise, particularly in the geological, engineering and exploration areas.”
He indicated that officers of Statex would remain in place. They are “competent and conservative, and fit the mold that we are looking for,” Shortley said.
For the six months ended April 30, Statex reported net income of $541,689 and revenues of $7.9 million. In fiscal 1984, Statex reported a $1.8 million net loss and revenues of $16 million.
Statex has 35 employees, owns three drilling rigs and has an interest in or operates about 500 oil and gas fields in Texas, Oklahoma and California, according to Dhar Carman, Statex’s senior vice president, finance.
PSA and Statex already are involved in drilling operations at one Texas field, Shortley said.
Shortley said in June that PSA’s energy subsidiary would generate $4 million in revenues and a pre-tax loss of about $1 million. However, the operation, he said, would generate a positive cash flow, after debt service, of more than $6 million.
At the time, he cautioned that “one has to remember that our investment has not been for short-term gains.”
A CalMat spokesman said the sale is part of a “plan to utilize its capital in its basic businesses.”
The proposed acquisition is subject to government approval and “certain other conditions,” according to a PSA spokeswoman.
Meanwhile, in response to an ongoing West Coast air fare war, PSA on Tuesday cut its one-way unrestricted fare to Las Vegas, Phoenix and Tucson from both Seattle and Portland to $98. Fares previously ranged from $214 to $240. The new fare is effective Sept. 10.