Speculation is ChevronTexaco interested in acquiring company

Rumors that ChevronTexaco is interested in acquiring Unocal Corp. have left many economists, analysts and other experts unclear about what that could mean for Unocal's operations in the Cook Inlet basin.

Some think it could mean expansion of the company's operations in the region; some suspect they may want to sell their inlet holdings.

The Wall Street Journal reported Thursday that ChevronTexaco was considering a bid for Unocal. Earlier rumors surfaced that China National Offshore Oil Corp. also was interested in Unocal.

On March 2, the day before the Journal article, Unocal's stock was trading at just under $54. Trading closed Thursday at $59.33.

Arlon Tussing, a semi-retired professor with the University of Alaska Anchorage Institute of Social and Economic Research, said the search for an acquisition is in response to high oil prices. Buying another company is another way to get more assets, he said.

Unocal's inlet assets are in the category of what ChevronTexaco is looking for — undeveloped reserves, he said. Tussing did not think ChevronTexaco would be in a hurry to give up those assets.

Unocal employs 300 Alas-kans — 200 in the Kenai area. In 2003, Unocal spent $177 million in salaries and wages and with other businesses and $42 million in state taxes and royalties, according to company sources.

Fadel Gheit, senior energy analyst for Oppenheimer and Co. in New York, said it is difficult to say what ChevronTexaco would do with Unocal's holding's in the inlet. But if they acquired Unocal, it would be a much bigger company making their inlet holdings much less significant, he said. Speculating, he said it is not likely the company would want to keep the inlet assets.

"It's not as important to them," he said.

But what they have in the inlet region may be attractive for a smaller company, he said.

Sam Van Vactor, president of Economic Insight Inc., an energy and natural resources economics firm, thought it could mean positive things for oil and gas in Alaska.

"That would bring ChevronTexaco into the area," Van Vactor said.

ChevronTexaco has financing and other resources that could help Unocal develop their oil and gas operations in the state, he said.

The company has not been a major player in the state in natural resource development, but an acquisition could generate some interest, he said.

Unocal has been active in resource development and Alaska is a significant and politically secure resource base, he said.

Van Vactor said he was not surprised that ChevronTexaco may be interested in the company. Economically, Unocal is one of the weaker companies, but they have good assets, he said.

Roxanne Sinz, spokesperson for Unocal said the acquisition is pure speculation and had no comment.

ChevronTexaco also had no comment on the matter.

On the whole, Cook Inlet has been a reasonable place for Unocal to make money, said Tim Ryherd, a commercial analyst for the Alaska Department of Natural Resources Division of Oil and Gas.

"Whether they're going to build (their inlet assets) up or sell it off, that's hard to say," Ryherd said.

He said a drop in the price of oil may motivate the company to sell its assets.

However, if a deal is made between ChevronTexaco and Unocal, he said the what they have in the inlet probably will not be a factor in the deal.

"It's peanuts," he said, adding the inlet is a small market.

But it can be profitable, he said.

Ryherd said holdings on the North Slope may play a bigger role in Unocal's future in the state if they are acquired by ChevronTexaco. Both companies have small holdings on the Slope and combining those assets could improve their position in that region, he said.