Business News short takes
Posted on Wednesday, August 1, 2007
Marathon agrees to buy Western Oil
HOUSTON — Energy company Marathon Oil Corp. said Tuesday that it has agreed to buy Western Oil Sands Inc. for $ 5. 5 billion in cash and stock, giving it a stake in Canada’s oil sands market.
Shareholders of Western Oil, based in Calgary, Alberta, will get $ 3. 6 billion in cash and Marathon stock worth about $ 1. 9 billion.
Marathon also will assume $ 650 million of Western Oil’s debt, valuing the total deal at roughly $ 6. 2 billion.
As part of the deal, Western is required to spin off Western-Zagros, its wholly owned subsidiary with interests in Kurdistan, before the deal closes. The closing is expected in the fourth quarter of this year.
Marathon said the deal gives it a 20 percent interest in the Athabasca Oil Sands Project in Alberta currently held by Western Oil. Shell Canada Ltd. and Chevron Canada Ltd. hold the remaining 60 percent and 20 percent stake, respectively.
The benefit, Marathon said, is immediate net production of about 31, 000 barrels per day of bitumen, a thick oil. The Athabasca project, which includes facilities owned by the joint venture and third parties, mines the oil sands deposits and extracts the bitumen, which is upgraded to synthetic crude oil.
Marathon is the fourth-largest U. S. integrated oil company and the nation’s fifth-largest refiner.
The oil sands mining operation encompasses the Muskeg River Mine, north of Fort McMurray, Alberta, and the Scotford Upgrader, near Edmonton, Alberta.
The deal is subject to approval by Western shareholders and other conditions. Airbus A 380 OK’d for major airports
Airbus SAS, the world’s largest maker of commercial aircraft, won certification from European and U. S. authorities for the double-decker A 380 model to fly into most of the world’s major airports.
The Federal Aviation Administration and European Aviation Safety Agency gave the 525-seat plane approval to operate on runways with a width of 150 feet or more, the Toulouse, Francebased plane maker said in an e-mailed statement. Most airports that handle wide-body airliners have runways measuring at least 150 feet across.
The A 380, scheduled for its first delivery to Singapore Airlines Ltd. in October, has already made test flights to more than 40 airports, including Paris’ Charles de Gaulle, Frankfurt, New York’s John F. Kennedy, Los Angeles and Sydney. Landing permission until now has been case by case. More than 70 airports will be ready by 2011 to handle the model, Airbus said.
Singapore Airlines hasn’t specified the date of its first commercial A 380 flight. The airline said July 25 that seats on the flight will be auctioned off, with all proceeds donated to charity.
Airbus is running two years behind schedule on A 380 deliveries even as the company met its original schedule for winning approval to fly the model commercially. Whole Foods challenges FTC analysis
WASHINGTON — A lawyer for Whole Foods Markets Inc. on Tuesday sought to discredit a government analysis that concluded its proposed acquisition of rival Wild Oats Markets Inc. would be bad for consumers.
The Federal Trade Commission has filed suit in the U. S. District Court for the District of Columbia to block the deal.
Paul H. Friedman, Whole Foods’ attorney, argued during the opening of a two-day court hearing that an expert witness called by the FTC did not consider relevant economic data, such as changes in prices at Whole Foods stores after Wild Oats exited several markets where the two companies competed.
Such pricing data could show whether Wild Oats acts as a constraint on Whole Foods’ ability to raise prices. Whether a transaction will give a combined company greater pricing power is a key question in antitrust law. Whole Foods is arguing that the FTC’s antitrust case is weaker without such data.
The government’s witness, Kevin Murphy, a professor at the University of Chicago, said that the available pricing data is inadequate.
Friedman questioned Murphy on expert testimony he provided to the court in writing. Murphy’s testimony remains under seal.
Whole Foods said in February that it would pay approximately $ 565 million, or $ 18. 50 per share, for its Boulder, Colo.-based rival — a 17 percent premium at the time. That price is significantly above Wild Oats’ closing price of $ 15. 50 Monday, indicating that the market is skeptical of the deal’s chances. Alaska seeks BP’s ’ 06 oil-spill records
NEW YORK — Alaska regulators have asked BP PLC to turn over a broad range of documents related to oil spills at the company’s pipelines and processing facilities in 2006 that forced the London-based oil company to shut part of Prudhoe Bay, the most productive U. S. oil field.
In a subpoena issued in June, the Alaska Department of Environmental Conservation is seeking documents related to anticorrosion measures taken by BP on its Prudhoe Bay pipelines, samples taken from the pipelines, correspondence between BP, the federal government and congressional investigators, and a host of other documents and records.
The subpoena also seeks documents related to estimates of proven reserves and production rate forecasts from filings that the BP Prudhoe Bay Royalty Trust and BP made with the U. S. Securities and Exchange Commission.
BP spokesmen didn’t return a call seeking comment. It’s unclear why the state issued the additional subpoena. State officials didn’t return a call seeking comment.
The subpoena adds to several the company has received from the state of Alaska and federal grand juries investigating how BP allowed its pipelines to become so corroded. The subpoena is part of a civil investigation, but the U. S. Environmental Protection Agency and the Justice Department are conducting a criminal investigation into whether BP’s pipeline maintenance program violated the Clean Water Act.
Prudhoe Bay is operated by BP and owned by BP, ConocoPhillips Co. and Exxon Mobil Corp. 29 firms win U. S. computer contract
WASHINGTON — Twenty-nine companies — including Electronic Data Systems Corp., General Dynamics Corp. and AT&T Inc. — on Tuesday were awarded a federal computer systems contract potentially worth up to $ 50 billion over 10 years.
The General Services Administration, the government’s main buying arm, said the five-year contract, which has five one-year options, covers most technology services, such as computer design, software engineering and systems integration.
The so-called Alliant contract is open to all federal agencies, including the Defense Department, and getting on the long-anticipated contract is a big deal for the companies.
“The key here is to get pre-qualified,” said Jim Krouse, an analyst at market research provider Government Sales Force.
But the winners aren’t necessarily guaranteed work from the agencies, analysts said.
Agencies will issue orders for services through the governmentwide contract and the companies will have to bid on them. Agencies can also choose to go on their own.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
