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Yates Turns Down Pair of Bids

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Copyright © 2012 Albuquerque Journal

Yates Petroleum Corp. in Artesia has rejected acquisition bids by Occidental Petroleum Corp. and Concho Resources Inc., according to two longtime oil executives in southeastern New Mexico.

Yates has declined to comment about the bids, but an Artesia oil executive with 30 years in the Permian Basin in southeastern New Mexico said Yates told its employees last week it had rejected Oxy and Concho.

“They sent an email to employees that said the bids received were not acceptable,” the executive told the Journal. “I spoke with three professional staff at Yates who said the company is still exploring its options, but they didn’t see the bids they got as meeting expectations.”

Bid values aren’t publicly known, but The Wall Street Journal reported on Nov. 8 that Yates could fetch as much as $3 billion in an acquisition. The company, which has hired J.P. Morgan Chase & Co. to find a buyer, is one of the largest privately held U.S. oil producers.

Yates spokesman Jim Lucas said the company does not comment on rumors or speculation.

The Artesia oil executive said Yates structured the acquisition as a stock sale, which may have watered down the bids. “As a stock sale, there could be concern about unknown liabilities potentially in the closet, whereas an asset sale is usually seen as a much better deal,” he said.

Yates prefers a stock deal because the family might pay more taxes in an asset sale, he added.

Yates family concerns about employees and the local community may have also influenced decisions to reject the bids, according to another longtime oil executive from Roswell.

“They turned down the high offer (in the bids) because one of the Yates’ demands is that the buyer maintain a large presence in Artesia, and the (bidding) company wouldn’t commit to that,” the executive told the Journal.

Bloomberg News reported in September that the Yates family wanted to complete a transaction before the end of the year, when the U.S. income tax rate on capital gains is due to increase. That is now unlikely, but the company is still reviewing its options, including a possible public stock offering.
— This article appeared on page B1 of the Albuquerque Journal

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