Anderson Company to Merge With Pauley Petroleum
LOS ANGELES (AP) _ Hondo Oil & Gas Co., a New Mexico concern half-owned by former Atlantic Richfield Co. chairman Robert O. Anderson, has agreed to merge with Los Angeles-based Pauley Petroleum Co.
The merger would create a small integrated independent oil concern, adding further fuel to the belief that Anderson is eager to build another oil company as he did with Arco, the nation’s seventh largest.
The merger will be carried out by Pauley - which now has 2.9 million shares - issuing 10 million new shares to Hondo, which will own slightly more than 77 percent of the combined operation.
Hondo, bassed in Roswell, N.M., has 43 million barrels of oil or oil equivalents, all of it acquired by Anderson and Lonrho PLC of London for $180 million from Arco in 1986. About $150 million of the purchase prices is still carried by the company as debt.
Anderson bought deep-drilling rights to 600 Arco properties in Arkansas, Colorado, Kansas, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, Texas, Utah and Wyoming.
A shareholder lawsuit filed against Arco claiming that the Anderson group was the only bidder and acquired the properties at far below their true value was dismissed.
Most of Pauley’s business comes from its 22,000-barrel-a-day refinery in Newhall, Calif., as well as its asphalt and land-development segments. Pauley sought unsuccessfully three years ago to sell the Newhall refinery.
Pauley also has reserves of 10 million barrels of oil and four billion cubic feet of natural gas, but for the past three years its exploration and development of those properties has been dormant as the company has worked to reduce its debt to $3 million from $56 million.
For the nine months ended May 31, Pauley earned $274,000, or 9 cents per share, on revenue of $104.7 million, compared to a year earlier when it netted $4 million, or $1.38 per share, on sales of $132 million.
Pauley’s chairman, William Pagen, attributed the sharp drop to rising crude oil prices that have squeezed the profit margins of refiners.