Each one in plain English, with the numbers worked through for a shareholder.
3 Oct 2005asset acquisition disposition● NeutralMajor
On Sept. 27, 2005 Unocal's Canadian subsidiaries completed the sale of Northrock Resources to Pogo Producing for about $1.7 billion. This closes the July 8 agreement, which had been announced at US$1.8 billion; the filing does not explain the lower figure. Separately, the 2005 deferred compensation plan was amended effective Sept. 28, and Chevron took over sponsorship and the payment obligations. The filing again calls Unocal a wholly-owned Chevron subsidiary.
Union Oil, Unocal's subsidiary, agreed under an Aug. 26, 2005 credit agreement to provide a $3 billion revolving credit facility to Chevron Capital. Chevron Capital borrowed $1 billion on Sept. 12, repayable by Aug. 15, 2008 at a market interest rate. Union Oil can demand repayment on two banking days' notice, and the loan is unsecured and not guaranteed by Chevron. The filing describes Unocal, Union Oil and Chevron Capital as all wholly owned subsidiaries of Chevron and lists a San Ramon address. This indicates the merger had been completed, though the filing gives no completion date or election results.
This follow-up 8-K files the text of Amendment No. 1 to the Chevron merger agreement (dated July 19, 2005) as Exhibit 2.1. The filing itself only says the amendment increases the consideration. The $69 cash, 1.03 share and $27.60 plus 0.618 share terms were set out in the July 20 filing.
On July 19, 2005 Unocal, Chevron and Blue Merger Sub amended the April merger agreement to raise the price. Holders may now elect $69 in cash, 1.03 Chevron shares, or $27.60 cash plus 0.618 of a Chevron share per Unocal share. The all-cash and all-stock choices are subject to proration. This improves the cash terms from the earlier $65.00 cash and $16.25 plus 0.7725 share offers, while the all-stock ratio stays at 1.03.
Unocal adopted a new 2005 deferred compensation plan for senior employees and amended its directors' deferred compensation plan and three nonqualified retirement plans. The changes respond to the 2004 American Jobs Creation Act tax rules. This is a routine compensation-plan update with no stated effect on the merger or on operations.
On July 8, 2005 Unocal agreed to sell all the stock of its wholly owned Canadian subsidiary Northrock Resources Ltd. to Pogo Producing for US$1.8 billion in cash. Unocal expects about US$1.5 billion after tax. The release says Canada was under 7% of Unocal's reserves (year-end 2004) and production (1Q 2005). Closing is expected in the third quarter of 2005, subject to customary Canadian regulatory approvals. It would add to cash that Unocal estimated at about US$1.8 billion at the end of Q2.
Unocal sent shareholders its definitive proxy for the Chevron merger. The vote is at a special meeting on Aug. 10, 2005 (record date June 29), and the board unanimously recommends FOR. Holders can elect $65.00 cash, 1.03 Chevron shares, or 0.7725 share plus $16.25, subject to proration. At June 29 prices this was worth $58.46 for all-stock and about $60.10 for the mixed election, and former Unocal holders would own about 9.2% of Chevron. The letter also discloses a June 22, 2005 CNOOC proposal of $67 per share in cash. Unocal is in discussions with CNOOC and expects to update holders before the meeting. This continues the April merger agreement and adds a rival bid.
The board gave Vice Chairman John Creighton an extra $20,000 for an April 1-6, 2005 business trip to Bangladesh and Thailand, and amended the directors' deferred compensation plan to allow a 'rabbi trust' to fund payouts. The filing also notes the final 2005 annual meeting vote results were released by press release on May 24, 2005, but the results themselves are not given in the text, so it is not stated whether the Chevron merger was voted on.
Unocal agreed on April 4, 2005 to merge into a subsidiary of ChevronTexaco. Each Unocal share converts into 1.03 ChevronTexaco shares, $65.00 cash, or $16.25 cash plus 0.7725 of a ChevronTexaco share, as the holder elects, with 75% of Unocal shares taking stock and 25% cash (proration if oversubscribed). Closing needs Unocal shareholder approval, Hart-Scott-Rodino expiry and other regulatory approvals; Unocal may owe ChevronTexaco a $500 million termination fee in specified circumstances. The preferred share purchase rights will expire just before completion. This is a pending deal, not yet completed.
Unocal signed a new three-year employment agreement with General Counsel Samuel Gillespie III, effective Feb. 8, 2005, replacing his two-year agreement from Oct. 2003. Base salary is $500,000, with severance of 3.18 times salary plus three times target bonus on termination without cause, and an excise-tax gross-up.
The compensation committee approved 2004 bonuses, 2005 salaries and 2005 equity awards for senior executives; for example CEO Charles Williamson's salary rose from $970,008 to $1,040,004 and his 2004 bonus was $1,236,760. The filing says 2004 shareholder return was below the peer average but internal operating performance beat target. The board also adopted new nonqualified retirement and savings plans, mainly in response to a 2004 tax law. Joseph Bryant is now listed as President and COO (joined Sept. 2004).
On Dec. 3, 2004 the boards approved a revised and continued change-of-control severance program for U.S. non-union employees; it had been due to mostly expire Dec. 31, 2004. They also raised the Vice Chairman's annual retainer from $48,000 to $100,000 from Jan. 1, 2005 (John W. Creighton, Jr. holds the role). The filing says Unocal is not currently in discussions with anyone about a change of control.
Unocal reported a successful Gehem-2 appraisal well in the Ganal area offshore East Kalimantan: a gas column over 550 feet, 240 feet of net gas pay and 55 feet of net oil pay, with a test flow of 31 million cubic feet of gas and 1,917 barrels of condensate a day. This builds on the July 2003 Gehem-1 discovery; next come a deep test on the Gula structure and Gehem-3 in the second quarter of 2004 (Unocal holds 80%). Separately, Unocal received $60 million from PT PLN for its rights in the Sarulla geothermal project in Sumatra, and will record a gain in the first quarter of 2004.
Unocal reported a significant oil discovery at the BP-operated Puma well in Green Canyon block 823, Gulf of Mexico, with about 500 net feet of oil pay at 19,034 feet; Unocal holds 15% (BP 51.66%, BHP Billiton 33.34%). The field size is not yet known and needs more seismic and appraisal drilling. Separately, a second Hawkes well in Mississippi Canyon 508 found non-commercial hydrocarbons and was plugged and abandoned, with an approximately $8 million pre-tax charge to fourth quarter 2003 earnings.
Unocal reported a gas-condensate and oil discovery at the Gehem-1 well in the Ganal contract area offshore East Kalimantan, Indonesia, 3.5 miles south of Ranggas: 617 feet of net gas and gas-condensate pay and 18 feet of net oil pay in 5,981 feet of water. It also finished the Ranggas Selatan-1 appraisal well in the Rapak area, with 187 feet of net oil pay and 258 feet of net gas pay, extending Ranggas to the south. Unocal holds 80% in both areas and still plans to have Ranggas ready for government approval by early next year; this advances the Ranggas appraisal thread from earlier filings.
Unocal and Union Oil filed the final amendment to the Pure tender offer: the offer expired at midnight New York time on Oct. 29, 2002 and Union Oil accepted 16,634,625 Pure shares for exchange. That is fewer than the 23,746,585 maximum shares sought. The filing does not state the resulting ownership percentage or whether the 90% minimum was met or waived; the cover still shows 71.3%, so the short-form merger outcome is not resolved here. Pure holders who tendered receive Unocal shares.
Unocal and Union Oil filed Amendment No. 8 to the Pure tender offer statement, adding only an Oct. 23, 2002 press release announcing an extension of the offer's expiry. The filing does not give the new expiry date; the 71.3% Pure holding is unchanged. This means the offer was not completed by the Oct. 25 deadline (inference from the extension).
Unocal filed Amendment No. 5 to the Pure S-4, replacing one offer condition so that any development after Oct. 17, 2002 in the Pure stockholder litigation that is adverse to the defendants in that litigation becomes a condition. It also adds auditor wording (PricewaterhouseCoopers for Pure's 1999 statements, KPMG for 2000-2001) and updates the exhibit list and consents. The filing does not say what prompted the condition change; the offer terms are not restated in the visible text.
Unocal and Union Oil filed Amendment No. 7 to the Pure tender offer statement, only updating the exhibit list to point to the Oct. 11, 2002 prospectus (the 0.74 offer) and the letter of transmittal. The filing states no new terms; the 71.3% Pure holding (35,890,333 shares including 3,181,266 held by Jack D. Hightower under a voting agreement) is unchanged, and the fee is restated as $46,141 on a $501,527,875 valuation.
Unocal filed Amendment No. 4 to the Pure S-4, raising the offer again to 0.74 Unocal share per Pure share and extending the expiry to midnight New York time on Oct. 25, 2002. A special committee of Pure's independent directors says the offer is fair and recommends that Pure holders tender. Union Oil still needs 90% (it owns about 65%), with a short-form merger at 0.74 to follow; up to 17,572,473 Unocal shares are registered. This continues the buyout and follows the Oct. 9 agreement with Pure management.
Unocal and Union Oil filed Amendment No. 6 to the Pure tender offer statement, adding a press release and an Oct. 9, 2002 Agreement to Tender among Unocal, Union Oil, Jack D. Hightower and other Pure officers. The press release says Unocal reached an agreement with Pure management and is raising the exchange ratio to 0.74 (from 0.70). The 71.3% Pure holding is unchanged; the agreement's detailed terms are not in this filing.
Unocal filed Amendment No. 3 to the Pure S-4, now offering a higher exchange ratio of 0.70 Unocal share per Pure share (up from 0.6527) and pushing the expiry to midnight New York time on Oct. 17, 2002. The 90% minimum remains (Union Oil owns about 65%), and a short-form merger would follow at the same 0.70 ratio, with appraisal rights for dissenters; up to 16,622,610 Unocal shares are registered. This sweetens the offer announced Aug. 20 and extends the timeline past the original Oct. 2 date.
Unocal and Union Oil filed Amendment No. 5 to the Pure tender offer statement, adding references to a new prospectus dated Oct. 2, 2002 and to a Delaware Chancery Court decision, In Re Pure Resources, Inc., dated Oct. 1, 2002. This is the court ruling behind the injunction flagged on Oct. 1, though the filing does not say what the court ordered. The filing fee is restated as $49,046 on a $553,110,833 valuation (23,746,585 shares at $22.45). The 71.3% Pure holding is unchanged.
Unocal and Union Oil filed Amendment No. 4 to the Pure tender offer statement, only adding a reference to an Oct. 2, 2002 Unocal press release announcing an increase in the offer. The filing itself does not give the new terms; the 0.6527 ratio is still quoted in the text, and the new ratio is not stated here. The 71.3% Pure holding is unchanged. This follows the Oct. 1 injunction news and shows the offer is being sweetened (the filing does not say why).
Unocal and Union Oil filed Amendment No. 3 to the Pure tender offer statement, adding only a reference to an Oct. 1, 2002 press release announcing an injunction relating to the offer. The filing does not say who obtained the injunction, what it blocks, or what it means for the Oct. 2 expiry; that is an open question, and a possible hold-up of the offer is an inference only. This is the first sign in the filings that the Pure buyout may be delayed.
Unocal and Union Oil filed Amendment No. 2 to the Pure tender offer statement, only updating the exhibit reference to include the Sept. 20, 2002 amendment of the S-4. The offer terms and the 71.3% Pure holding are unchanged.
Unocal filed a second amendment to the S-4 for the Pure Resources exchange offer, carrying the full prospectus again with the same terms: 0.6527 Unocal share per Pure share, a 90% minimum, expiry at midnight New York time on Oct. 2, 2002 unless extended, and no subsequent offering period. The visible text shows no change to the terms; the changes made in this amendment are not visible in the excerpt provided, so what was altered is unknown.
