Westport Resources to Acquire Oil Rival Belco

Westport Resources Corp., raising its profile in the Rocky Mountain region, said over the weekend it plans to buy rival oil and natural gas production firm Belco Oil & Gas Corp. in a stock deal worth $334 million.

Belco shareholders would receive 0.4125 share of new Westport common stock for each share of Belco common stock, and Westport shareholders would receive one share of new Westport common stock for each share of old Westport common stock, according to statements issued by the companies Saturday.

The acquisition values New York-based Belco at just less than $10.12 a share based on Denver-based Westport’s closing price of $24.53 Friday on the New York Stock Exchange.

Belco’s shares, which have slipped 17% since tapping a 52-week high of $12.75 on Jan. 2, climbed 25 cents to close at $10.57 Friday on the NYSE.

The deal includes the assumption of about $588 million in debt, fair market value of Belco’s hedge portfolio and convertible preferred stock.

Belco’s outstanding preferred stock would remain outstanding once the deal is complete.

With the acquisition, Westport would gain Belco’s rights to drill on 1.3 million of acres in the Rocky Mountain region.

The deal would almost triple Westport’s reserves to 1.2 trillion cubic feet, 52% of which are gas and 48% oil. Westport’s daily production of gas and oil would almost double, from 179 million cubic feet equivalent to about 346 million cubic feet equivalent, Belco President and Chief Operating Officer Grant Henderson said Sunday.

Westport said the deal would immediately add to production, net asset value and reserves on a per-share basis. The company also expects the acquisition to boost cash flow from 2002.

Westport Chairman and Chief Executive Donald Wolf would become chairman and CEO of the combined company. Westport’s board would increase to 11 members from nine, with the addition of Belco Chairman and CEO Robert Belfer and Belco Director and Vice Chairman Laurence Belfer.