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Show y Trend Raises More Pressing Questions Thejalt Lake Tribune Sunday, March F13 18, 1984 Traditional Antitrust Fears About Oil Mergers Miss Point By Robert Burns Associated Press Writer NEW YORK Americas oil giants are on a match-makin- g spree n like none before. Three of the names Texaco, Mobil and have shelled out a comChevron bined $29 billion to sweep competitors off their feet already this year. That is far more than was spent on oil mergers in all of 1982 and 1983 combined. This joining of corporate hands is arousing antitrust passions in Congress, but many energy analysts believe the merger trend raises more pressing questions: Impact ou Exploration? Does the combining of big oil companies make economic sense? Will it mean less money left to spend on oil exploration? Will supplies be short as a result? Daniel Yergin, president ol Cambridge Energy Research Associates in Cambridge, Mass., says it is too early to know the answers. But it is clear already, he says, that traditional antitrust fears about oil mergers miss the point. An estimated 40,000 U.S. companies are involved in the exploration, production, transmission, refining, distribution and marketing sides of the oil business. Although about of the nations gaso line is refined by the top 25 oil companies, none currently holds as muc() as 8 percent of the market. "The more important question is whether there will be a narrowing of geological ideas," Yergin says. Will fewer oil giants roaming the oil frontier mean fewer ideas about where to find new deposits and thus fewer exploration successes? I dont think there is a clear answer there yet," he says. Some in Congress disagree. Sen. Bennett Johnston, a Louisiana Democrat usually considered an ally of the oil industry, is pressing for a ban on takeovers of domestic oil companies with more than 100 million barrels of proven reserves. That means the 50 largest companies would be off limits to buyers. Johnston's proposal would halt, at least temporarily, the largest proposed takeover in corporate history: the $13.3 billion buyout of Gulf Corp. by Standard Oil Co. of California, which is better known to the public by its Chevron brand name. Proposed Merger Ban Johnstons proposed merger ban also would stop Mobil Corp.s proposed $5.7 billion takeover of Superior Oil Co. Since the ban would apply only to oil industry mergers announced after Feb. 28, it would not affect Texacos recently completed $10.1 billion takeover of Getty Oil best-know- three-quarte- which was announced in early January. Johnston contends that the big oil companies, by burdening themselves with billions of dollars in debt to buy competitors, will have less to spend on oil exploration. "For the consumer, that will mean reduced supplies and higher prices, he said. "For the country, it will mean more oil imports ... For the economy, it will mean increased pressure on credit markets and a threat to the economic recovery. Few economists or energy analysts think the consequence are so grave, but most agree the outcome will depend partly on how well the merging companies fit together. Greater Efficiencies George Keller, the chairman of J Standard of California, said shortly after announcing his companys bid for Gulf on March 5 that the merger would create greater efficiencies in oil refining and marketing. As a result, he said, gasoline and other fuel products could be delivered at a lower cost than before the merger. Many analysts agree. It can be economic, and it doesnt make a great deal of difference to the national interest, said Dillard Spriggs, president of Petroleum Analysis Ltd., a New York consulting firm. Co., ers were not diverting investment capital from exploration and development programs. But it also said that of all the oil industry acquisitions since 1970. only one resulted in clearly greater efficiencies. That was Snell Oil Co s 1979 acquisition of Belridge Oil Co for $3 6 billion, in which Shell's superior oil recovery technology enhanced the value of Relridges reserves. The FTC study concluded that oil product prices and supplies had not been hurt by oil mergers, and that as a result there wano need to limit such activity. New Pace and Scope , The pace and scope of oil company mergers has changed since that study, however. The number of oil companies sold The Reagan administration has not taken a public position on proposals in Congress to block oil company mergers. But Donald Hodel, the energy secretary, told the American Paper Institute this past week he was not concerned by the merger trend. Larger Resource Base "It seems to me that the new. merged company now has a larger resource base, and if it does not wish to deplete that resource base, it will have to go out and explore at a faster rate, Hodel said. It is not clear, however, whether the huge cost of these mergers will allow the companies to spend as much on oil exploration together as they would have separately. A 1982 study by the Federal Trade Commission said oil company merg FIRSTiTHRIRT, GERTiIEIGATiE 'All CURRENT AND INSURED FOR EFFECTIVE 10.92 EFFECTIVE $2,500 Minimum Deposit ANNUAL YIELD This announcement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful under the securities laws of any such state. The securities are being offered in connection with a distribution by the Company, and represent new financing. The offering is made only by the Prospectus. GUARANTEED AND INSURED FOR CCRRtNTRATE YIELD ANNUAL Substantial Penalty for Early Withdrawal. Rates Subject to Change & 125 South Main Street, Salt Lake City, Utah Telephone 521-321- Common Stock 0 IN-- v per share 1 1 984 March , The Company was formed to acquire interest(s) in oil and gas properties deemed suitable for exploration and, if warranted, development, as the Companys financial and other resources may permit. Ct EARMtl D. CENTERVIL LE, SAL T I AKE. MURRAY. ORFM AND PA SON CXiAN. CX.DfcN, $.10 ($.001 Par Value) FSL1C OFFICES GjkL Inc. STOCO, 6,000,000 Shares mm Main Office fft 13$ 12.01 FIVE YEARS RATr. GUARANTEED three years through 1983, $44.2 billion was spent on oil company buyouts, according to Grimm. That is nearly double the amount spent in the previous six years combined. The $29 billion shelled out already this year is a record for any single year, and many industry observers believe the 1984 total may go consid- erably higher. What we're seeing, unfortunately. is the survival of the fittest, said Urvan Sternfels, president of the National Petroleum Refiners Association, a trade group. COMMERCE MONEYIMAR ONE YEAR has increased every year since 1978 The busiest year was 1983, when 111 companies were bought out, compared with 80 in 1982, according to W T. Grimm & Co., a Chicago firm that keeps track of merger activity. The amount of money spent on the mergers also has Jumped. In the Copies of the Prospectus describing these securities may be obtained upon request by contacting: Boa Jdckstfcvtiie Raton Melbourne Si Petersburg Cora! spij f Tampa West Palm Beach Georgia Atlanta Illinois Gienvtew Palos HiUs Carlton Schaury NEVER APPLY FOR A LOAN Now you can deal with lifes untimely demands for with the convenience of writing a check. Whether you want ing bills. ..remodel your home... or make a last minute business investment, CITYLINE minimum $25,000 up to $100,000 or more in SPECIAL OFFER! preapproved funds. 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