Monday PM August 28th, 2006

Kinder Morgan going private...Western Refining acquiring Giant Industries, creating fourth-largest publicly traded independent U.S. oil refiner...Lundberg Survey notes sharpest decline in gasoline prices in nearly a year...

Kinder Morgan said today that a management-led investment group will take the company private in a cash deal worth $15 billion. The group also will assume $7 billion in the Houston-based natural-gas pipeline operator's debt. Members of the buyout group include chairman and chief executive Richard D. Kinder and company co-founder Bill Morgan, as well as other members of management and the board. Also represented are investment companies Goldman Sachs Capital Partners, American International Group, Carlyle Group and Riverstone Holdings. Kinder would remain as chairman and CEO. Under terms of the deal, Kinder Morgan shareholders would get $107.50 per share. That's a 5.7 percent premium over Kinder Morgan's Friday closing stock price and a 27 percent premium over the closing price on May 26th. That's the last trading day before the investor group made its proposal. The company's board of directors has unanimously voted to accept the agreement. If shareholders approve, the deal is expected to close at the beginning of 2007.


A state judge in Galveston is ordering BP Chief Executive John Browne to give a deposition for litigation related to the March 2005 accident at the Texas City refinery. Judge Susan Criss of the 212th Judicial District ruled that Browne and BP global refining chief John Manzoni must give depositions in the case. BP is expected to appeal the ruling through state courts. BP has reached settlements with many of the victims, but is fighting allegations of gross negligence. A jury trial is set for September 18th.


El Paso-based Western Refining has confirmed that it's acquiring Giant Industries for $1.23 billion in cash. The deal will create the fourth-largest publicly traded independent oil refiner in the United States. Under the terms of the deal, Western Refining will assume $275 million in debt and will pay $83 per share for Scottsdale, Arizona-based company. That's a 16-percent premium over giant's share price at the close of trading Friday. The combined company will have crude oil throughput capacity of about 216,000 barrels per day from four refineries. The deal is expected to close in the fourth quarter, pending customary conditions and regulatory approvals.


Motorists are seeing the sharpest decline in gasoline prices in nearly a year. According to the Lundberg Survey, prices dropped an average of 15 cents a gallon in the past two weeks. Analyst Trilby Lundberg credits the price drop to abundant gasoline supplies and lower demand. The national average for self-serve regular gas stands at $2.87 a gallon. That's down from just under $3.03 but is about 25 cents-a-gallon higher than this time last year. Mid-grade prices average $2.98 a gallon, while premium averages $3.09. The lowest average price is $2.60 in Des Moines, Iowa. The highest is $3.32 in Honolulu.


Wisconsin-based truck cargo company Schneider National plans to hire 130 new professional truck drivers in the Galveston area by September 30th, including 65 bulk drivers and an additional 65 over-the-road drivers. The company is accepting inquiries and applications on its Web site.


The president of Chad has suspended the oil minister and two other cabinet members who negotiated deals with two foreign oil firms. Chadian President Idriss Deby had ordered California-based Chevron and Malaysia-based Petronas out of the central African country over a tax dispute. Deby has accused the companies of failing to pay $450 million in taxes. He says the two firms should immediately begin making plans to leave. Chevron and Petronas are part of an oil production consortium led by Irving-based Exxon Mobil. It was unclear how Chad might carry out the expulsion order, which Deby announced in a message broadcast on state-run radio Saturday. Chevron and Petronas have a skeleton staff of only three in the African country.


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