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Cook Inlet producer Cross Timbers holds stake in Enstar parent Company purchased stock in Seagull Energy, since merged into Ocean Energy, as one of investments in other oil, gas companies Allen Baker PNA Contributing Writer
Cross Timbers Oil Co., which recently purchased oil properties in Cook Inlet, also owns a stake in the parent of the Enstar natural gas utility. But it’s not been a stellar performer for Cross Timbers so far.
Last July, Cross Timbers filed documents with the Securities and Exchange Commission showing the company, its CEO, and a subsidiary owned 6.9 percent of Seagull Energy, then parent of Enstar. The average cost of those share was $16.08, according to Preston Kirk, a spokesman for Cross Timbers. Seagull was among about 10 oil companies in which Cross Timbers bought stock, Kirk said. Substantial investments in Wiser Oil Co. and Benton Oil and Gas Co. also triggered SEC filings.
“We invested quite a sum of money in other oil and gas companies,” said John O’Rear, vice president and treasurer of Cross Timbers. “We thought Seagull was an undervalued investment.” The stock purchases were made strictly as investments, not as a prelude to any takeover moves, O’Rear said.
Like many who invested in oil companies in 1998, Cross Timbers is showing quite a lot of red ink at this point. For the year ending Dec. 31, Cross Timbers showed a realized loss of $14.8 million, an unrealized loss of $72.6 million and interest payments of $6.3 million related to the investments.
Cross Timbers took a write-down of $53.4 million on its balance sheet in that period for the equity investments. The current cost basis for the stock holdings is now about $139 million, Kirk said. Seagull merged into Ocean Energy As for Seagull, that company was merged into Ocean Energy on March 30, with shares of both companies converting to shares in the new entity on a one-to-one basis. Former Seagull shareholders own 38.5 percent of the new company, so that dilutes the Cross Timbers ownership to about 2.6 percent of the new Ocean Energy.
As for the value of that investment, Ocean Energy was trading at $6.56 a share on the New York Stock Exchange before the Easter break. That’s a loss so far of about $42 million on the 4.4 million shares Cross Timbers owned as of last July.
On the former Shell Oil Co. holdings in Cook Inlet, Cross Timbers is doing geological models right now, evaluating the property for possible future development, said O’Rear. That’s an ongoing process, he said, but for now, “we don’t have any plans beyond that.” Shell got 2 million shares of Cross Timbers for those holdings, but registration of those shares was put off until August, O’Rear said. Registration of the share would make them available for quick sale on the open market.
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