Conoco, Phillips expected to merge

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Posted 8:22AM on Tuesday, March 12, 2002

HOUSTON - ConocoPhillips is getting closer to reality. Shareholders of Conoco Inc. and Phillips Petroleum Co. are expected to approve the companies' proposed $15.6 billion merger, which would create the nation's third-biggest oil corporation. The shareholders' vote, tallied simultaneously at two meetings Tuesday, was scheduled a week after the European Union granted its regulatory approval for the merger. The Federal Trade Commission has requested more information on the deal before it decides. Both companies are hopeful the merger will proceed in the second half of 2002. The new company, ConocoPhillips, would assume Conoco's home in Houston, leaving in limbo the 2,400 Phillips workers in its hometown of Bartlesville, Okla. Oklahoma politicians lobbied the new company to be based there, but executives from both companies decided to locate in Houston, the nation's fourth-largest city and energy industry hub. Only Exxon Mobil Corp. and ChevronTexaco Corp. would be larger than ConocoPhillips in the United States, and it would be the sixth-biggest investor-owned oil company in the world. The company would control or have stakes in 19 refineries worldwide with a capacity of 2.6 million barrels a day. It would be the United States' top refiner and would be behind 17,000 U.S. gas stations flagged by the respective corporate names along with the Circle K and 76 brands. Joint oil reserves of the new company would be about 8.7 billion barrels. The companies estimate the deal will save them $750 million annually once redundancies and an undetermined number of workers are cut. Though both companies describe the deal as a merger of equals, Phillips shareholders will own 56.6 percent of ConocoPhillips, with Conoco shareholders coming away with 43.4 percent. Phillips chairman and chief executive officer James J. Mulva would be president and chief executive of the combined company. His lieutenants will be a mix of current Phillips and Conoco executives. Conoco chairman Archie W. Dunham is delaying his retirement to serve as chairman of the new company until he steps down in 2004, when Mulva will add that role. Each company would supply the new board with eight directors.