DOME <DMP> BENEFITS FROM TAKEOVER SPECULATION
Shares of Dome Petroleum Ltd posted
their biggest gain in months in the U.S. and Canada as stock
markets foresaw a takeover tug-of-war beginning for the
debt-heavy company.
    Dome rose 1/4 to 1-1/8 on the American Stock Exchange and
gained 31 cents to 1.44 Canadian dlrs on the Toronto Stock
Exchange, where it was the most active stock. It rose as high
as 1.50 dlrs in Toronto during the day. In recent months, Dome
has normally moved by only a few cents per day.
    TransCanada PipeLines yesterday announced a 4.3 billion dlr
Canadian (3.22 billion U.S.) bid for all of Dome's assets, but
Dome, which is based in Calgary, Alberta, said it is also still
talking with two other companies, which it refuses to identify.
    Market analysts today said the other two firms are believed
to be foreign oil companies, noting that TransCanada yesterday
stressed that its bid is "a Canadian solution to the financial
difficulties of Dome Petroleum."
    "The talk is about Conoco, which is controlled by DuPont
<DD>, and Atlantic Richfield Co <ARC>, which sold its Canadian
interest in 1975 and could be getting back in," said Wilf Gobert
of Peters and Co Ltd.
    David Bryson of Moss Lawson and Co also noted that British
Petroleum PLC <BP> is mentioned as a possible buyer, despite
BP's 70 U.S. dlr per share bid two weeks ago for the 45 percent
of Standard Oil Co <SRD> it does not already own.
    Calgary-based independent analyst James Hamilton has said
in recent reports that Amoco Corp <AN> has also been in talks
with Dome.
    Representatives of Atlantic Richfield, British Petroleum,
Conoco and Amoco were not immediately available for comment.
    Gobert characterized the market action in Dome today as "awfully
optimistic," given TransCanada's offer to give current Dome
shareholders stock in a new subsidiary, which it valued at 1.10
dlrs Canadian per common share.
    Under the offer, current Dome common and preferred
shareholders would own 20 pct of the new subsidiary, which
would own and operate all Dome's former assets. TransCanada
would own 80 pct.
    However, Bryson said the market may be looking at the
potential for shares in a publicly-traded subsidiary. "The
TransCanada offer has quite a bit of upside potential for Dome,"
he said.
    Gobert said he believes the TransCanada offer is "at the
upper end of what I thought somebody would pay for Dome."
    The TransCanada proposal would pay Dome's creditors 3.87
billion Canadian dlrs (2.90 billion U.S. dlrs), with another
one billion Canadian dlrs (750 mln U.S. dlrs) available to
secured creditors if the Dome subsidiary earns profits above a
certain level. TransCanada would not detail the profit level.
    Dome currently is seeking to restructure about six billion
Canadian dlrs (4.5 billion U.S. dlrs) in debt, which it took on
several years ago when oil prices were high and the company
wanted to expand.
    "There has been speculation that Dome's assets are capable
of supporting debt of three to four billion dlrs, so on that
basis, the TransCanada offer would be at the upper end of that,"
Gobert said.
    Dome's debt troubles have often obscured the fact that it
is a major player in the Canadian oil and gas field. It holds
reserves of about 176 mln barrels of crude oil and 3.9 billion
cubic feet of natural gas.
    The company also owns or has an interest in 14.2 mln acres
of oil and gas exploration land in the province of Alberta, the
heart of Canada's oil industry.
   Dome owns or has an interest in a total of 36.1 mln acres of
land across Canada.
   The company also has tax credits of about 2.5 billion dlrs
Canadian (1.9 billion dlrs U.S.). It reported a 1986 loss of
2.2 billion dlrs (1.65 billion dlrs U.S.), believed to be the
largest ever by a Canadian company.
   
 Reuter
