Rebuttal: ConocoPhillips boss Jim Mulva
Mulva defends Burlington offer
Oil supermajor ConocoPhillips today defended the price it will pay to acquire gas producer Burlington Resources, saying a premium was warranted given the quality of the assets and the tight energy markets.
ConocoPhillips said on Monday it would acquire Burlington for a mixture of cash and stock. The deal was worth about $33.88 billion at Thursday's close.
The combined entity would be North America's largest gas producer and be within striking distance, on a revenue basis, of Chevron.
However, analysts have taken a somewhat dim view of the deal, questioning why ConocoPhillips would do the deal now rather than earlier in the year when natural gas, and hence gas-producing assets, would be cheaper.
ConocoPhillips chief executive Jim Mulva conceded that his company was paying a "full price" for Burlington, but insisted that was necessary given the limited availability of high-quality gas assets.
"Certainly current natural gas prices are very high, but this is not a bet on short-term gas prices," Mulva said. "This is about access to long-lived, low-risk reserves."
Mulva also said ConocoPhillips was considering hedging to lock in high gas prices or protect against declines.