BP and Amoco Will Merge in a $48-Billion Stock Swap

Creating one of the top three oil companies worldwide, and the largest British company, BP and Amoco announced today that they will merge. Amoco shareholders will be offered 3.97 BP ordinary shares, and following the merger BP shareholders will hold about 60% of the new company, and Amoco shareholders the remaining 40% of the combined market capitalization of $110 billion. BP will be renamed BP Amoco PLC. The company will be headquartered in London, with North American refining and downstream activities based in Chicago, and Western Hemisphere exploration and production activities based in Houston. Worldwide chemical operations are expected eventually to be managed from Chicago.

The executive management of the new group will be headed by BP chief executive Sir John Browne and the board will be co-chaired by BP chairman Peter Sutherland and Amoco chairman Larry Fuller. "International competition in the industry is already fierce and will grow more acute as new players emerge. In such a climate the best investment opportunities will go increasingly to companies that have the size and financial strength to take on those large-scale projects that offer a truly distinctive return," said Browne and Fuller in a joint statement.

The companies said that they see a potential $2 billion in savings by the end of 2000, coming from a mix of reductions in staff in areas of overlap, more focused exploration, streamlining of business processes, improved procurement and rationalization where operations are duplicated.

Amoco's brandname will take over the BP brand in North America, but the BP brand will reign over the rest of the world. The BP Amoco group will have combined reserves of around 14.8 billion barrels of oil and gas equivalent and daily production of some three million barrels. It will have prime positions in established major oil and gas provinces of the world, including the North Sea and North America. It will be the largest producer of oil and gas in the US, with output from Alaska, the Gulf of Mexico and the Lower 48 states. Amoco is already the biggest gas producer in the US and Canada.

It will have key positions and enhanced opportunities for access to new acreage in regions expected to supply a growing share of global energy demand in the 21st century. These include Algeria, Angola, Argentina, Australia, Azerbaijan, Bolivia, Canada, Colombia, Egypt, Kazakhstan, Kuwait, Norway, Oman, Russia and Siberia, Trinidad, the UAE and Venezuela.

Combining the chemicals operations will create a business with revenues of some $13 billion. The new chemicals business will be one of the world's largest petrochemicals companies, with leading positions in seven core products—acetic acid, acrylonitrile, aromatics, purified terephthalic acid (PTA), alpha-olefins, purified isophthalic acid (PIA) and polypropylene—and a portfolio of key proprietary technologies.

In their statement, BP and Amoco listed the following assets and sales figures for their respective divisions:

The BP Group

• 1997 replacement cost pre-exceptional earnings of $4.6 billion

• 1997 revenues exceeding $71 billion

• Capital employed in 1997 was $30.7 billion

• Capital budget for 1998 of $6 billion

• Some 56,450 employees world-wide at end-1997

• In business since 1909

• Over 375,000 shareholders.

Exploration & Production

• 1997 world-wide net production of over 1.25 million bbl/d of crude oil and natural gas liquids and around 1.66 billion cubic feet of natural gas a day

• Estimated net proven liquid reserves of 6.85 billion bbl; estimated net proven natural gas reserves of 10.5 trillion cubic feet

• Exploration activities in 16 countries and production activities in 11 countries

• Largest oil producer in the US with over 8% of the oil produced in the country coming from BP fields

• Largest oil producer in the UK North Sea.

Refining and Marketing

• Total oil product sales of 3.3 million bbl/d

• 17,900 service stations worldwide

• Refinery throughput of around 1.8 million bbl/d

• Owned or part-owned refineries in 12 countries, including the UK, France, Spain, the US, Australia, South Africa and Singapore

• One of the largest marketers of aviation fuels, serving customers at more than 600 airports

• Leading supplier of fuels and lubricants to the shipping industry with facilities at more than 800 ports.

Chemicals

• Produces around 9.4 million tons of product a year

• World's largest supplier of acetic acid and its derivatives to the market

• A leading European manufacturer of polyethylene which is used in a range of modern products from food packaging to gas pipes

• More than 90 per cent of the world's manufacturing capacity for acrylonitrile uses BP's proprietary process

• BP has the world's largest acrylonitrile plant at Green Lake, Texas -- One of Europe's biggest styrenics producers and the top supplier of oxygenated solvents

• Europe's leading producer of polybutene, used in cable insulation, fuel additives and adhesives.

Solar

• World's second largest photovoltaic company

• In 1997 sales reached $80 million, up 33% from 1996

• Manufactures the highest-efficiency solar cells in volume production.

Amoco Corporation

• 1997 earnings of $2.7 billion

• 1997 revenues exceeding $36 billion

• Capital employed in 1997 was $22 billion

• Capital budget for 1998 of $3.9 billion

• Some 43,000 employees world-wide at end-1997

• In business since 1889

• Over 340,000 shareholders.

Exploration & Production

• 1997 world-wide net production averaged 637,000 bbl/d of crude oil and natural gas liquids and more than 4 billion cubic feet of natural gas per day

• Proven liquid reserves of 2.4 billion bbl; proven natural gas reserves of more than 21 trillion cubic feet

• Exploration activities in some 20 countries, production activities in 14 countries

• Largest North American private natural gas producer; second largest reserves holder.

Refining and Marketing

• Total oil product sales of 1.2 million bbl/d

• 9,300 service stations, all in the US

• Five US refineries process a total of about 1 million bbl/d of crude.

Chemicals

• Capacity of some 13 million m.t./yr

• World's largest producer of purified terephthalic acid (PTA), used to make polyester fibers, cassette tapes, photographic film and many types of plastic containers

• World's largest producer of paraxylene, used in making PTA-- World's largest producer of polybutene

• World's largest producer of poly alpha-olefins and second-biggest producer of linear alpha-olefins

• A leading worldwide producer of polypropylene, used in synthetic fabrics and fibers

• World's largest producer of woven polypropylene carpet-backing

• A leading supplier to the unsaturated polyester and paint and coatings markets.

Solar

• Amoco is 50% owner of Solarex Corporation, the largest producer of photovoltaic solar panels in the US.