SEC OKs Unocal Vote on Chevron Bid

Deal's consummation awaits stockholder's approval; readers say no to Chinese bid

SAN RAMON, Calif. -- The U.S. Securities & Exchange Commission (SEC) has cleared Chevron Corp.'s registration statement for the Unocal transaction, providing the company the ability to have its merger agreement with Unocal Corp. sent to Unocal stockholders for a vote on August 10.

But as reported last week, a Chinese, state-owned oil company, China National Offshore Oil Co. (CNOOC), has made a rival bid for the now upstream-focused Unocal. A CSP Daily News poll asking whether CNOOC should be allowed to bid on and possibly purchase Unocal shows respondents [image-nocss] overwhelmingly answering no.

Approximately 80% of the respondents to the poll said no, about 15% said yes and about 5% said they were not sure.

The SEC has declared effective Chevron's Form S-4 documents and amendments, which were originally filed May 26, 2005. The Form S-4 is a registration statement necessary to issue the shares of Chevron common stock that are part of the merger consideration. The registration statement contains a proxy statement for the special meeting of Unocal stockholders to vote on the merger.

SEC clearance follows the acceptance of consent orders issued by the Federal Trade Commission (FTC) on June 10, outlining the conditions under which the FTC will allow the transaction to proceed. The FTC consent orders are subject to a 30-day public comment period. With the SEC's clearance and FTC approval, there are no other U.S. regulatory requirements that would prevent the consummation of the merger if the transaction is approved by Unocal's stockholders.

"The successful completion of U.S. regulatory requirements demonstrates that our transaction can be brought to a quick and successful conclusion," said David J. O'Reilly, chairman and CEO of San Ramon, Calif.-based Chevron. "The Chevron-Unocal agreement presents a compelling, long-term investment opportunity for stockholders. Chevron has a proven track record of creating stockholder value from past mergers and acquisitions."

To enable the vote to proceed, El Segundo, Calif.-based Unocal set June 29, 2005, as its stockholder record date. Unocal stockholders were scheduled to vote on the transaction at a special meeting held by Unocal's board.

Unocal received a waiver from Chevron enabling it to engage in discussions with CNOOC concerning the rival bid for Unocal at any time until the date of the Unocal stockholder vote on the proposed merger with Chevron. Chevron has offered nearly $16.6 billion in cash and stock for Unocal.

Unocal said it intends promptly to commence such discussions with CNOOC. Whether the purchase of Unocal by the Chinese would pose a risk to U.S. security is one of many hurdles the proposed $18.5 billion offer must overcome.

Industry analysts have said the deal poses no genuine supply threat to the U.S. market, which imports about 12 million barrels of oil per day, because Unocal's resource base in the United States is relatively small. It is Unocal's Asian assets that CNOOC is really interested in, they said. CNOOC said the acquisition would more than double its production and estimated that 85% of the combined reserves of both companies are located in Asia and the Caspian Sea region.

Meanwhile, in other petroleum industry financial news, shareholders of Covington, Ky.-based Ashland Inc. at a special meeting yesterday approved the previously announced agreement to transfer Ashland's 38% interest in Marathon Ashland Petroleum LLC (MAP) and two other businesses to Marathon Oil Corp. in a transaction valued at approximately $3.7 billion. The two other businesses are Ashland's maleic anhydride business and 60 Valvoline Instant Oil Change (VIOC) centers in Michigan and northwest Ohio.

Approval required the affirmative vote of a majority of the shares outstanding as of May 12, 2005. Of the 72,984,120 shares eligible to be voted, 78% voted to approve the transaction. Of the shares voted, more than 98% voted to approve the transaction.

Closing of the transaction is expected to take place today.