Gulf Oil Case
Business 352
Gulf Oil Company
Sarah Barrette, Trevor Haug, Tyler Crawley, Maxwell Steimle
Group #1
10/31/12
Table of Contents Recent History Page 3 The Takeover Pages 3-4 The Auction Page 5 Financial Analysis Page 5-6 Standard Oil Company of California’s Alternatives Page 6 Recommendations Page 7 Works Cited Page 8
Appendix Balance Sheet (Table 1) Appendix 1 Operating Sheet (Table 2) Appendix 2 Financial Analysis (Table 3) Appendix 3
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Recent History. Gulf Oil Corporation lost an immense amount of their oil supply due to a large portion of the oil reserves being cut from Kuwait and Venezuela in 1975. James Lee became Chairman of Gulf Oil Corporation as the market reserves for oil were at an all-time low in 1981. Mr. Lee had two progressive ideas to help Gulf Oil escape their misfortunes. First, was to focus the company on oil, leaving behind energy developments of coal mining, uranium mining, and synthetic fuel. Second, was “discoveries and acquisitions” to help replace their own domestic reserves. One of the main acquisitions that Gulf Oil Corporation focused on was Cities Service. Efforts to acquire Cities Service were short-lived due to objections raised by the Federal Trade Commission. Due to a drop in the price of oil in the beginning of 1982 and continuing through 1984, Mr. Lee decided to reduce his exploration expenditures. Since Gulf Oil Corporation had a sizable cash flow, they also decided to repurchase 30 million of their 195 million shares outstanding.
The Takeover. In 1982, Mesa Petroleum Company attempted takeovers on both Cities Services and General American Oil of Texas. Although both takeover attempts proved to be unsuccessful, Mesa sold back Cities Service’s stock for a gain of $31.5 million, and Mesa sold back General American Oil of Texas stock for a gain of $42.5 million plus an additional $15 million dollars for
Gulf Oil Company
Sarah Barrette, Trevor Haug, Tyler Crawley, Maxwell Steimle
Group #1
10/31/12
Table of Contents Recent History Page 3 The Takeover Pages 3-4 The Auction Page 5 Financial Analysis Page 5-6 Standard Oil Company of California’s Alternatives Page 6 Recommendations Page 7 Works Cited Page 8
Appendix Balance Sheet (Table 1) Appendix 1 Operating Sheet (Table 2) Appendix 2 Financial Analysis (Table 3) Appendix 3
Give appropriate names and add additional appendix info
Take space out
Recent History. Gulf Oil Corporation lost an immense amount of their oil supply due to a large portion of the oil reserves being cut from Kuwait and Venezuela in 1975. James Lee became Chairman of Gulf Oil Corporation as the market reserves for oil were at an all-time low in 1981. Mr. Lee had two progressive ideas to help Gulf Oil escape their misfortunes. First, was to focus the company on oil, leaving behind energy developments of coal mining, uranium mining, and synthetic fuel. Second, was “discoveries and acquisitions” to help replace their own domestic reserves. One of the main acquisitions that Gulf Oil Corporation focused on was Cities Service. Efforts to acquire Cities Service were short-lived due to objections raised by the Federal Trade Commission. Due to a drop in the price of oil in the beginning of 1982 and continuing through 1984, Mr. Lee decided to reduce his exploration expenditures. Since Gulf Oil Corporation had a sizable cash flow, they also decided to repurchase 30 million of their 195 million shares outstanding.
The Takeover. In 1982, Mesa Petroleum Company attempted takeovers on both Cities Services and General American Oil of Texas. Although both takeover attempts proved to be unsuccessful, Mesa sold back Cities Service’s stock for a gain of $31.5 million, and Mesa sold back General American Oil of Texas stock for a gain of $42.5 million plus an additional $15 million dollars for
Cited: Investopedia. ValueClick, Inc, n.d. Web. 21 Oct. 2012. <http://www.investopedia.com/terms/r/royaltyincometrust.asp#axzz2AjqUCwOp>. McGraw-Hill Irwin, Case Problems in Finance. New York: The McGraw-Hill Companies, 2005. 611-618. Print RMA. Annual Statement Studies. Philadelphia: Robert Morris Associates, 1990. 734-5. Print. Appendix