Burlington Resources to Buy LL & E

Burlington Resources Inc. said it will acquire Louisiana Land & Exploration Co. in a $3-billion stock deal that would form one of the nation’s biggest independent oil and natural gas companies. A unit of Houston-based Burlington Resources would acquire New Orleans-based LL&E; in an exchange of stock in which LL&E; shareholders would receive 1.525 shares of Burlington for each LL&E; share. Based on Burlington’s closing price of $46.125 on Wednesday, the transaction is worth $3.03 billion. Burlington would pay about $70 per share--a 21% premium. Burlington also would assume $500 million of LL&E; debt. After the announcement, LL&E;’s stock shot up $7.38 to close at $65.63 on the New York Stock Exchange. Burlington shares lost $1.75 to close at $44.38, also on the NYSE, as investors worried that the company might be paying too much. The price Burlington is paying reflects the heated competition for new oil and natural gas reserves. Because the expense of drilling has dropped greatly, oil exploration companies have a lot of cash, and low debt.