Hess to buy American Oil & Gas in all-stock deal worth about $450 million

Wednesday, July 28, 2010

Hess buys American Oil & Gas in $450M stock deal

NEW YORK — Hess Corp. on Wednesday said it will buy independent operator American Oil & Gas Inc. in an all-stock deal worth about $450 million intended to increase the company’s holdings in oil fields in North Dakota.

Hess said it will issue 0.1373 shares of its stock for each outstanding share of American Oil & Gas. The Denver-based company has about 60.6 million shares outstanding according to Thomson Reuters, and the stock closed Tuesday at $6.69.

Hess said the exchange represents a 9.4 percent premium on American’s Tuesday closing price.

The deal will increase by 85,000 net acres Hess’ holdings in the Bakken oil play in North Dakota. The Bakken region, which stretches from Canada into Montana and North Dakota, is thought to hold up to 3.65 billion barrels in oil reserves, according to the U.S. Geological Survey. It also contains about 1.85 trillion cubic feet of natural gas, and 148 million barrels of natural gas liquids. That puts it among the largest findings in the U.S. outside Alaska.

The deal requires a vote by American Oil & Gas shareholders and regulatory approvals. Holders of about 20.5 percent of the company have already agreed to vote in favor.

The deal is expected to close in the fourth quarter.

Goldman, Sachs & Co. is acting as financial adviser to Hess, and Tudor, Pickering, Holt & Co. Securities Inc. is acting as adviser to American Oil & Gas.

Separately Wednesday morning, Hess posted a second-quarter net income of $375 million, or $1.15 per share.

In morning trading, American Oil & Gas shares jumped 52 cents, or 7.7 percent, to $7.21. Hess shares slipped 30 cents to $53.

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