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Monday, 7 May, 2001, 18:41 GMT 19:41 UK
Shell blow as US target is sold
Shell petrol station and tanker
Shell's attempts to take control of an Australian firm have already been scuppered
Shell, the Anglo-Dutch oil giant, has received its second blow in weeks with the news that US takeover target Barrett Resources is to be bought by a smaller rival.

Tulsa, Oklahoma-based Williams said it had agreed to buy Barrett for about $2.5bn in cash, shares and assumed debt, beating an already-improved hostile bid of about $2bn from Shell.

The Anglo-Dutch firm has built up a strong financial position in recent years, helped by high oil prices and deep cost cuts, and is now pursuing a strategy of aggressive growth.

Recent acquisitions have included New Zealand's Fletcher Challenge Energy. But setbacks have included the blocking by the Australian government last month of an attempt to take control of Woodside Petroleum.

Rocky Mountains gas

Barrett had rejected Shell's two bids for it as inadequate.

The Denver, Colorado-based company has about 2.1 trillion cubic feet of natural gas reserves in the Rocky Mountains region.

It achieved revenue of $376m last year.

Its buyer, Williams, is best known as an energy trader and gas pipeline company and controls about 1.2 trillion cubic feet of natural gas reserves.

Fifth successive record

The end of the road for Shell's attempt to take over Barrett came the week after Shell reported a 23% rise in net profit to $3.86bn (2.69bn) for the first three months of 2001.

The company said the figure was a fifth successive quarterly record and reflected higher natural gas prices, bigger profits from oil refining and increased liquefied natural gas (LNG) sales.

Like all major oil companies, Shell has also benefited from strong crude oil prices in the past year.

The string of record profits from oil companies in recent months has led some consumer groups to accuse them of profiteering.

In the UK, the anger of most groups has been directed mainly at government for the relatively high level of tax imposed on retail petrol prices.

But Shell recently provoked consumers' anger by increasing forecourt prices only weeks after the government had announced a temporary cut in duty on unleaded fuel.

Similar to BP two years ago

Besides higher oil and gas prices, Shell's latest results also continued to reflect deep cost-cutting measures implemented in the wake of very low oil prices in 1998.

Analysts said the company was now in a position similar to that of UK rival BP two-three years ago, being well positioned to make significant acquisitions.

Incoming chairman Phil Watts - who has been Shell's head of exploration and production - is viewed as favouring an aggressive growth strategy.

Shell shares closed at 578.5 pence in London on Friday.

This was modestly down on the 2001 high of 601p and compared with last year's trading range of 411.75-627p.

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