U.S.

Big Oil Getting Even Bigger

November 18, 2001 / 5:35 PM EST / AP

Phillips Petroleum Co. and Conoco Inc. have signed an agreement to merge, in a deal tentatively valued at $35 billion.

The new business will be called ConocoPhillips and is expected to be the nation's third-biggest oil and gas company in the United States in terms of production. It will be the fifth-biggest refiner in the world.

The boards of directors for both companies announced the merger Sunday, which includes the assumption of about $19 billion in debt.

The merger still needs to be approved by the government and shareholders.

Under the terms of the deal, Phillips shareholders will get one share of ConocoPhillips stock for each Phillips share they own. Conoco shareholders will get 0.468 shares of the new stock.

The companies said in a statement that the merger would result in better growth opportunities, improved efficiency and development of energy exploration and production.

Conoco chairman and chief executive Archie W. Dunham will delay his retirement to 2004 and serve as chairman of ConocoPhillips. Phillip's chairman and CEO James J. Mulva will become the new company's president and CEO. He'll take the chairman's job after Dunham retires.

Bartlesville, Oklahoma-based Phillips is a familiar face to motorists in the United States with its Phillips 66 logo. The company has more than 5 billion barrels of oil in reserve.

Last year, it merged its gas gathering and processing operations with Duke Energy and combined its chemicals division with ChevronTexaco.

Phillips bought Tosco earlier this year, giving the combined company the capacity to produce more than 1.7 million barrels of oil a day.

Phillips sells gasoline at more than 12,000 locations under the Phillips 66, Circle K and 76 brands.

Houston-based Conoco has oil and gas exploration activities in 20 nations and has 3.7 billion barrels of oil in reserve. Earlier this year, it acquired Gulf Canada Resources.

The company also operates nearly 6,000 miles of pipelines nationwide and has stakes in nine refineries in the United States, Europe and Asia. It operates more than 7,000 gas stations in Europe, Thailand and the United States.

The deal comes on the heels of several big energy mergers. In September, the Federal Trade Commission approved Chevron Corp.'s acquisition of Texaco Inc. Other deals include BP Amoco's takeover of Atlantic Richfield Corp. in 1999 and Exxon Corp.'s acquisition of Mobil Corp., as the world's largest oil companies look for size and breadth to gain a competitive edge.