MOODY'S CONTINUES REVIEW OF ATLANTIC RICHFIELD COMPANY FOR POSSIBLE UPGRADE
New York, February 03, 2000 -- Moody's Investors Service is continuing its review of the A2 long-term debt rating of Atlantic Richfield Company (ARCO) for possible upgrade. The review was announced on April 1, 1999, in response to BP Amoco's proposed acquisition of ARCO. On February 2, 2000, BP Amoco and ARCO jointly announced their intention to litigate the U.S. Federal Trade Commission's decision to reject the proposed merger based on ani-trust concerns. The merger has already been approved by BP Amoco's and ARCO's shareholders, as well as the state of Alaska. If the merger ultimately fails to be consummated, Moody's would most likely confirm ARCO's A2 long-term debt and Prime-1 short-term ratings. The company's earnings have notably benefited in 1999 from the achievement of cost reductions in excess of plan, from higher oil pricing, and from a stronger refining and marketing performance. In a consolidating industry, ARCO remains a significant mid-sized integrated petroleum company, with approximately 4 billion barrel of oil equivalent reserves and a leading position in refining and marketing on the West Coast.
Moody's noted, however, that ARCO's competitive position as an independent company and its ability to grow will remain challenged by uncertainties arising during the merger transition period, as well as by its longer term fundamental need to grow and diversify its oil and natural gas reserves. Moody's believes the merger process and its uncertain outcome have, among other effects, delayed or possibly impaired the company's own upstream strategic plans and also subjected the company to the loss of key personnel.
Moody's is also continuing to review the Baa1 and Prime-2 ratings of Vastar Resources for possible upgrade. Moody's likewise would confirm Vastar's debt ratings if the merger failed. Vastar continues to demonstrate strong operational and financial results that support its current ratings.
Atlantic Richfield Company is headquartered in Los Angeles, California. Vastar Resources, Inc. is located in Houston, Texas.
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