Phillips completes acquisition of ARCO’s Alaska businesses

Petroleum News Alaska Staff

Phillips Petroleum Co. said Aug. 3 that it has completed its acquisition of ARCO’s businesses in Alaska. The $965 million second and final closing completed Aug. 1 involves Phillips’ acquisition of certain pipeline interests and marine assets. The first closing occurred April 26 and included ARCO’s exploration and production assets in Alaska. This closing brings the total cash paid and debt assumed for the acquisition to just under $6.5 billion. Including the additional payments Phillips may make to BP based on a formula tied to the price of crude oil, the total acquisition cost will be less than $6.9 billion.

Assets included in the second closing are a 22.3 percent interest in the trans-Alaska pipeline system, interests in other infrastructure pipelines and three double-hulled tankers currently under construction. Phillips paid $700 million in cash for these assets and assumed $265 million in debt.

“The acquisition in Alaska is a significant part of our strategy of growing our exploration and production business,” said Jim Mulva, Phillips’ chief executive officer. Mulva said the company’s debt balance is now less than $8.1 billion, and the company expects to further decrease debt by year end.

To reflect the completion of the acquisition, as well as the closing of the joint-venture transactions in the company’s chemicals and midstream segments, Phillips has revised its 2000 capital budget to $2.3 billion, excluding the approximately $6.5 billion for the Alaska acquisition and any payments tied to the price of crude oil. The original 2000 capital budget was $1.8 billion.