BUSINESS Love Lane Starter Houses Her Meatloaf Is East Hockey to Cost More Than Thought International Hit Makes Finals Oil Merger Mania: How Long Will It Last?
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'40 — MANCHESTER HERALD, Tuesday. March 6, 1984 BUSINESS Love Lane starter houses Her meatloaf Is East hockey to cost more than thought International hit makes finals Oil merger mania: How long will it last? ... pag« 3 ... page 14 ... page 9 Who's going to take over Texaco? to go out and buy proven reserves, it could probably do Who's going to buy Phillips Petroleum? so at a cost of $7 to $8 a barrel. That's roughly a third And what about Superior Oil and Unical (formerly less than the actual exploration and development Oil brIdes-to-be? Union OilotCalilornia)? Are they about to be gobbled costs, plus, he says, no 5-to-7-year waiting period. up? Moreover, he points out that the political Here are a dozen oil companies — maybe Dan Dorfman environment appears relatively congenial for big oil takeover It was a red-hot Wall Street story as we went to press brides-to-be — that are rated as Manchester, Conn. — the wild, frenzied speculation about the next oil mergers — what with the Federal Trade Commission candidates by various Wall Street sources. Clear tonight; giving its blessings to the Texaco-Getty deal. biggie about to be swallowed as many oil stocks shot Syndicated Included is an assessment of what the companies sunny Thursday Wednesday, March 7, 1984 would be worth on a per-share basis if broken up up in price. Columnist Forget that it would take untold billions of dollars to RIgLATING TO THE PROSPECTS of more oil and liquidated, as detailed by John S. Herold of — See page 2 Single copy: 254 do any of these deals — or a slew of others (like Sun mergers, Margoshes says a big catalyst is the general Greenwich, Conn., a leading appraiser of Co.. Louisiana Land & Exploration, Texas Eastern view that oil prices are likely to go down, rather than oil-industry assets. up. This reflects itself in relatively cheap oil-stock anrhpBtpr Hrralft Corp. or Amerada Hess). And forget that many of ' Recent Liq. Value these companies would fight like mad to avoid any fears of Iranian threats to impair the Strait of Hormuz prices, giving a wooer of an oil company considerable Price per-share maneuverability on a price basis. takeover. in the Mideast (through which pass 18 percent of the Pennzoil $38.25 $59.50 Margoshes, for one, challenges the view that oil. What's real — and sparking the big buying of oil free world's requirements or roughly 35 percent of the Phillips Pete 43.50 71.85 prices are headed lower. stocks — are the huge profits that have been made by free world's imports). The view is that any such Sun Co. 53.00 88.10 Over the short run — that's between now and the the Wall Street community in latching on to the Iranian effort would be met by immediate U.S. action Amerada Hess 33.00 65.60 next few months — he sees the spot price for oil (Arab, coattails of corporate raider T, Boone Pickens, Jr. to reopen the passageway, plus stepped-up oil Superior Oil 40.75 46.20 He's the wheeler-dealer chairman of Mesa Petro production eisewhere to minimize the shortages. light crude) rising from $28.75 a barrel to the mid-$30s. Hart says Lieberman Texaco 46.00 107.00 In other words, the overall view is that any such He reasons this would happen instantly if there was leum. which, together with a group of investors, has Unical 38.50 79.70 snapped up 13.2 percent of the shares of giant Gulf Oil. crisis would be shortlived. any interruption in the Strait of Hormuz. But even if it 28.25 55.55 Another reason the recent stock runup is thought by doesn't happen, the thought that it might occur could Occid. Pete La. Land-Exp. 33.75 38.20 THE PICKENS GROUP started to buy Gulf shares some to be lunacy: The current oil glut — which could push up the spot price. 119.90 at around the low $40s; they were around $70 at mean lower oil prices. ” But even if I’m wrong,” says Margoshes. "I see Texas East. Op. Corp. 67.50 he’s still won’t fight press-time. And since Gull's management wants no little downside risk in these stocks.” Murphy Oil 36.75 51.40 part of a takeover by the Pickens group, an even So the inference here is that the takeover craze On a longer-term basis — adjusting for inflation — Kerr-McGee 34.00 52.10 higher price for Gull shares is possible if the company could be nothing more than a flash in the pan — this our man also sees rising oil prices. He reasons that — as widely expected — winds up in the arms of a despite the recent acquisitions of such oil biggies as most of the easy oil in the world has been found, goshes. "But that's not because of earnings (which white knight. Getty, Cities Service, Conoco and Marathon. And particularly secure areas. Therefore, he says, to find should lag the general rise in corporate profits) ta t underdog right-to-die At press-time, Atlantic Richfield and Standard Oil therelore, so the reasoning goes, many energy stocks additional oil becomes increasingly costly. because of takeover fever and a growing recognition of California were the top rumored suitors. have run up in price beyond their true worth. (though still in the minority) that oil prices are not - M k ' In this context, he notes current exploration Maybe so, but that's not the way a couple of going to go down, but, in fact, will likely go up.” By Laurence McQuillan A takeover of Gulf — based on its current stock price investment pros see it. requires deeper drilling more offshore exploration Bv Sarah E. Hall and capitalization — would run over $11 billion. Such a (which is much costlier) and increasing activity in United Press International Herald Reporter They're Sandy Margoshes, Shearson American BATTERYMARCH'S BENNETT has made big deal would be the biggest corporate acquisition ever Express's oil-industry specialist, and John Bennett, inhospitable environments "(like the arctic). killings in Getty ($15 million), Gulf ($42 million) and Stale Attorney General Joseph I. Lieberman, who — topping the recent $10.4 billion record purchase of Despite three straight political victories, Sen. Gary senior v ice president and a member of (he investment Superior (over $6 million) — the last two unrealized THE BOTTOM LIN E in all of this, as Margoshes Hart said today he is still the underdog in the earlier argued that Sandra Foody’s interests weren’t Getty Oil by Texaco, policy committee of BatteryMarch Financial Man gains. But he nonetheless feels that the overall oil No wonder the idea ol huge multi-billion-dollar sees it: Since the real costs of linding oil are going up Democratic presidential race and does not expect to protected in a precedent-setting court case pressing agement, a Boston money management bigwig that group — despite the recent surge in stock prices (up r .. 1 acquisitions of the giant oil companies is no longer — and since OPEC can control production of its overtake Walter Mondale before April. her right to die, said this morning he won’t appeal supervises about $10 billion worth of assets. about 10‘/i percent in '84, vs. about a 5 percent general being looked upon as the rantings of some lunatic. t members (even though there have been some minor Hart, appearing on NBC’s ’’Today” program the Tuesday’s ruling that the woman’s life-sustaining market decline) — contains many undervalued, morning after his win in Vermont’s non-binding respirator may be disconnected. It has even gotten to the point where Texaco, nearly “ I EXPECT THE BUY-OUT RAGE to continue,” violations) — we’re ultimately looking at higher oil underground stocks. He bases this on stated book primary, said the contest shows “ what seems to be a " Id o not want to extend any further the suffering of 10 percent ol which is owned by the wealthy Bass Margoshes tells me. And he argues that there's a very prices. values and the market’s undervaluation of the pattern evolving, we certainly hope so, that will carry m the Foody family or delay what now appears to be the family of Texas, has become the subject ol hot compelling economic reason for this prospect. It’s obvious that an end to the Iranian-Iraqi war M reserves. on through March and April and on to the inevitable,” he said today in a prepared statement. takeover rumors. It you take one Wall Streeter's In brief: Most stock prices (of the domestic biggies) could considerably increase the availability of OPEC BatteryMarch is not only talking up the oils; it's assessment of w hat it would cost to buy Texaco — say oil — but in Margoshes’s judgment, such a prospect nomination.” Citing Judge Mary R. Hennessey’s ruling as do not adequately reflect the underlying value of their putting big bucks in them — 20 cents of eveiy active 'f f it ’V ’ $70 to $80 a share — that would piean a purchase price seems extremely remote for quite a while. With 100 percent of the 264 precincts reporting in "thoughtful” and the case "tragic,” Lieberman said oil and gas reserves; in other words, they're cheap. equity dollar. Its favorites: Atlantic Richfield, in the area ol $18 billion to $20 billion. Vermont, Hart had 51,703 votes or 71 percent. Mondale he nonetheless wished the court-appointed guardian As Margoshes explains it, if a major oil and gas His outlook for the big domestic oils: A 15 percent Standard Oil of Indiana.