Venoco Receives CEO Buyout Bid Valued at $770.2 Million
Venoco Inc. (VQ), the second-largest landholder in California’s Monterey oil-shale formation, received an offer from its chief executive officer to buy all outstanding shares in a transaction that values the company at $770.2 million.
Chairman and CEO Timothy Marquez, who already holds about 50.3 percent of the company’s stock, offered to buy the remaining shares for $12.50 each, the Denver-based company said in a statement today. The bid represents a 39 percent premium to its closing price on Aug. 26, according to Bloomberg data.
The offer is a significant discount to the value of the company’s assets and may prompt shareholder lawsuits since the stock was trading as high as $22.46 in February, Phil McPherson, a Newport Beach, California-based analyst with Global Hunter Securities LLC, said today in an interview. Another oil producer may emerge to make a higher bid or Marquez may have to raise his offer, McPherson said.
Other bidders may include Occidental Petroleum Corp. (OXY), Hess Corp. (HES), Chesapeake Energy Corp. (CHK) or Plains Exploration & Production Co. (PXP), he said. McPherson owns Venoco shares and rates the company a “buy.”
Marquez is at least the third CEO of a U.S. oil and natural-gas company to propose a buyout in the past year. Both of the previous proposals, at Fort Worth, Texas-based Quicksilver Resources Inc. and Exco Resources Inc. of Dallas, failed.
Adding Monterey Holdings
Venoco owns 214,000 net acres in the Monterey shale and plans to finish the year with 300,000 net acres, Marquez told investors on an Aug. 2 earnings conference call. The Monterey holds an estimated 15.4 billion barrels of oil, about 64 percent of the total U.S. oil-shale reserves, according to a July 8 report by the Energy Information Administration.
Before today, Venoco had fallen 51 percent after spending $40 million to drill six horizontal wells that didn’t produce, McPherson said. Occidental owns the most land in the Monterey shale with 1.6 million acres, he said.
Venoco will form a special committee of directors, excluding Marquez, to consider the bid, according to the company’s statement.
Venoco rose $2.78, or 31 percent, to $11.76 at 4:15 p.m. in New York Stock Exchange composite trading.
To contact the reporter on this story: Bradley Olson in Houston at bradleyolson@bloomberg.net
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net
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