Pioneer merges with Evergreen

MAT-SU -- Evergreen Resources Inc. recently announced plans to merge with Pioneer Natural Resources Company, a Dallas-based oil and gas exploration and production company. The announcement, for some Valley residents, carries the ring of, "I told you so."

The $2.1 billion merger has been approved by both Evergreen and Pioneer boards of directors, but has yet to be approved by shareholders from either company. According to information from the two companies released Tuesday, Evergreen would become a subsidiary of Pioneer and Evergreen shareholders would receive new shares of Pioneer common stock and cash. Pioneer will maintain its Dallas headquarters, but will retain Evergreen's Denver, Colo. offices as its Rocky Mountain base of operations.

"Evergreen's long-lived natural gas reserves are a perfect fit with our vision to expand our premier asset foundation in North America to further anchor our growing exploration and international portfolio," said Scott Sheffield, Pioneer's chairman and chief executive officer in a press release Tuesday. Calls made Wednesday to Pioneer and Evergreen's headquarters were not returned by press time Thursday morning.

In the same press release, Mark Sexton, Evergreen's president and chief executive officer, said Pioneer's merger offer would maintain the company's level of responsible development.

"We believe this merger provides an attractive opportunity to realize the value of our long-lived natural gas assets and provide exposure for our shareholders to high-impact exploration projects," Sexton said. "Pioneer's entree into the Rockies adds another quality operator that will pay particular attention to the environmentally responsible operating techniques that this region demands, continuing Evergreen's unique business model and philosophy of doing it right. Our corporate cultures and attitudes toward value creation and community enrichment are extremely complementary."

Chris Whittington-Evans, president of Friends of Mat-Su, a local nonprofit that has become a watchdog of sorts on coal-bed methane activities in the Mat-Su, said the group expected to see turnover among lease ownership in the Mat-Su.

"It's not unexpected, it's a very volatile industry -- it's an industry that relies on mergers and acquisitions and divestations," Whittington-Evans said. "We've said from the very beginning that the citizens of the Valley weren't going to be comfortable with one company's etiquette or promises, that it was important for the state to recognize standards needed to be developed that would apply to all [coal-bed methane developers]."

The merger would increase the number of proven reserves held by Pioneer by one-third, according to information from the company. Evergreen's proven reserves are concentrated in the Raton and Piceance/Uintah basins in the Rocky Mountains and in Southern Canada. In 2003, Evergreen produced 127 million cubic feet of natural gas equivalent per day and, according to information from the company, expects to average 160 million cubic feet per day in 2004.

Pioneer's headquarters are in Dallas, but it has operations in the United States, Argentina, Canada, Gabon, South Africa and Tunisia. In conjunction with the merger, Sexton would be brought on as a Class I director on Pioneer's board of directors and Andrew Lundquist, also an Evergreen director, would be brought on as a Class III director. Sexton, along with two other Evergreen directors, entered into a non-competition agreement with Pioneer prohibiting them from competing against Pioneer in the Raton Basin for one year after the merger.

If the merger goes through, the Mat-Su leases would not be Pioneer's only holdings in the state. The company currently holds 70 percent of leases on 25,000 acres near the Kuparuk River. In January, Pioneer announced an agreement to take over 100 percent of the leases of about 23,000 acres of ConocoPhillips leases in the Beaufort Sea, along with its partner, Armstrong Alaska Inc.

If the merger is approved by shareholders, it could be final by September or October.

Contact Rindi White at rindi.white@frontiersman.com.