| BP<BP> OFFER RAISES EXPECTATIONS FOR OIL VALUES | |
| British Petroleum Plc's plan to pay | |
| 7.4 billion dlrs for less than half of Standard Oil Co has | |
| signalled higher values in the U.S. oil patch, analysts said. | |
| "I think that BP's bid is a very strong affirmation and | |
| clear signal that they have confidence in the U.S., and they | |
| think the barrel of oil in the ground is going to go higher," | |
| said Sanford Margoshes of Shearson Lehman Brothers Inc. | |
| BP earlier today said its U.S. unit planned to tender at 70 | |
| dlrs per share for the 45 pct of Standard it does not already | |
| own. | |
| "It's a 7.4 billion dlr price that (shows) OPEC has won the | |
| war and oil prices are not going to crack," said Prescott, Ball | |
| and Turben analyst Bruce Lazier. | |
| "Behind that is a huge implication for the rest of the | |
| energy issues out there in the stock market, particularly those | |
| that are acquisition targets," Lazier said. | |
| One of those mentioned by Lazier was USX Corp, an | |
| energy-steel concern which had been courted by investor Carl | |
| Icahn and drew the attention of Australian Robert Holmes a | |
| Court last year. Rumors continue to swirl around its stock. | |
| Margoshes said he does not foresee major U.S. oil firms | |
| falling into takeover situations for several years, with the | |
| exception of possibly Amerada Hess Corp <AHC>. He said most of | |
| the majors found partners in the last round of matchmaking | |
| which ended two years ago, and others restructured to the point | |
| that they have become unattractive. | |
| U.S. oil stocks rallied in response to the offer. Exxon | |
| Corp <XON> rose 1-1/8 to 88-1/2. Chevron Corp <CHV> jumped | |
| 1-1/8 to 58-7/8, and Texaco <TX> climbed 1/4 to 37-3/4. Unocal | |
| Corp <UCL> rose 1-3/4, while Occidental Petroleum Corp <OXY> | |
| climbed 1-1/8 to 34-3/4. Amoco Corp <AN> rose 1-3/8 to 83-3/4. | |
| Standard Oil's stock was up 6-1/4 in heavy trading to | |
| 71-1/8. Earlier in the session it had been at a high of 72-1/4. | |
| Wall Street has speculated British Petroleum may boost its | |
| offer by several dlrs per share, but the company maintained it | |
| would not raise the 70 dlr bid. | |
| British Petroleum stock rose 2-1/4 to 59-5/8. | |
| Analysts said the fact British Petroleum made such a bid in | |
| the first place indicates that the British oil giant has | |
| changed its outlook for the oil industry. | |
| Analysts said last year British Petroleum held one of the | |
| more bearish positions on oil prices. | |
| "They said the real price of oil would stay at 15 dlrs (a | |
| barrel) for several years, and I think they beat a hasty | |
| retreat from that point of view," Margoshes said. | |
| "They are more appropriately today looking more | |
| optimistically. I believe they are looking at 18 dlrs | |
| (long-term)...also in their heart of hearts they believe that | |
| will be exceeded," Margoshes said. | |
| The U.S. benchmark crude West Texas Intermediate was | |
| trading today around 18.60 dlrs per barrel. | |
| Analysts said British Petroleum might have been able to buy | |
| up the rest of Standard Oil for about 50 dlrs per share when | |
| oil prices were falling last year. | |
| They said Standard Oil's brightest asset is its slightly | |
| more than 50 pct ownership of the Alaskan Prudhoe Bay oil | |
| field. Analysts also said the company has other interests in | |
| the Alaskan North Slope. | |
| Analysts said the Standard investment is extremely | |
| attractive to BP because the U.S. is the largest oil market and | |
| has hard-to-replace reserves. | |
| "I think it just fits in with their long-range plans to | |
| increase their position in the U.S. market," Dean Witter | |
| analyst Eugene Nowak said. | |
| Analysts said it also raises BP's visibility ahead of the | |
| British government's announced disposal of 31.7 pct of BP | |
| stock. The U.K. government said it would dispose of the holding | |
| sometime in the year beginning April one. | |
| After acquiring all of Standard, most of BP's reserves | |
| would be in the U.S., but only about six pct of its stock is | |
| held in the U.S. | |
| "The only way they can sell all that stock is to move it | |
| into the United States. No other market can handle all that | |
| stock," said L.F. rothschild analyst Rosario Ilacqua. | |
| In 1986, Standard Oil had net losses of 345 mln dlrs on | |
| revenues of 10.02 billion dlrs, compared to a profit the year | |
| earlier of 308 mln dlrs on revenues of 13.82 billion dlrs. | |