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. Last Updated: 07/27/2016

Phillips Dethrones BP in Alaska

ANCHORAGE, Alaska -- Phillips Petroleum Co. said Wednesday it had become the largest oil producer in Alaska, and the company's chief executive unfurleda new red-and-black Alaska logo to signal completion of its $7 billion takeover of Atlantic Richfield's oil and gas assets.

"This is a very historic and significant event in the 83-year history of Phillips Petroleum," said Phillips chief executive Jim Mulva at an Anchorage news conference in the downtown Arco building, soon to become known as the Phillips building.

The takeover, which was recently approved by the Federal Trade Commission, caps a deal that was announced more than a month ago but ran into a roadblock when Exxon Mobil Corp. sued to halt it.

BP Amoco PLC agreed to sell the assets in order to appease the FTC's antitrust concerns over its $27 billion takeover of Arco. But Exxon Mobil challenged the sale of Arco's North Slope business, citing decades-old purchase options, or rights of first refusal.

The companies settled the case earlier this month, paving the way for the acquisition. Under the agreement, Exxon Mobil and Phillips each gained an additional 30,000 barrels per day of oil production from BP Amoco.

Mulva said the acquisition made Phillips the largest oil producer in Alaska, a distinction formerly held by BP Amoco. Phillips holds the equivalent of 2.2 billion barrels of oil, doubling the company's reserves.

The deal also boosts Phillips' Alaska exploration holdings to 480,000 hectares, accounting for nearly 40 percent of the state's daily output of about one million barrels.

The takeover adds 340,000 barrels of daily North Slope production to Phillips' current 20,000 barrels of daily Cook Inlet production, said company spokeswoman Dawn Patience.

Mulva said the deal's immediate effects on West Coast gasoline prices will be negligible.

"All of the production that we have [in] Alaska will be dedicated directly toward the West Coast markets," he said.

He did not comment on whether the company would continue with the controversial practice employed by BP Amoco of exporting Alaska North Slope oil to the Far East.

Phillips said its earnings and cash flow would rise more than it had expected when it first announced the deal. The company originally said it would add $1.28 to earnings per share and $2.94 to cash flow in 2000.

Mulva added that the transition from Arco Alaska to Phillips will be smooth, with relatively few layoffs from the 1,500 employees.

Kevin Meyers, former Arco Alaska president, was named new president of Phillips Alaska Inc. "It'll be nice to be working for No. 1," he said at the news conference.

Arco drilled eight North Slope exploration wells this winter, with three of them in the National Petroleum Reserve-Alaska west of the Prudhoe Bay-Kuparuk complex, Meyers said. Phillips plans an aggressive exploration program next year, he said.

Meyers also vowed to pursue marketing of the North Slope's vast natural gas reserves. "I have a belief that we'll see gas get to market by the end of this decade," he said.

The Phillips takeover ends Arco's legacy in Alaska, which dated back to before Alaska became a state in 1957.