Merrill Lynch to buy Petrie Parkman

Roger Fillion, Rocky Mountain News

Published October 24, 2006 at midnight

Text size

More Energy

Petrie Parkman & Co., the Denver energy-industry investment bank headed by ace oil analyst Thomas Petrie, agreed to be sold to Wall Street giant Merrill Lynch & Co.

Terms weren't disclosed. The purchase is the latest in a recent string of buyouts of Colorado companies, including RxKinetix Inc., Myogen Inc., Jibbitz LLC and Izze Beverage Co.

The deal also comes after Petrie Parkman - which specializes in energy mergers and acquisitions - filed plans last month to raise as much as $115 million through an initial public offering of stock.

Petrie, CEO of the company, said Merrill came along as the company was doing the paperwork for its IPO. But he said the IPO didn't spur the offer.

"From our standpoint, I had pretty well decided I wanted to do one or the other. And it became clear to me as I examined the two that this was the preferred route to go," he told the Rocky Mountain News.

For Merrill, the purchase could help the Wall Street firm win more business as an adviser in oil exploration and production company mergers. Petrie Parkman handles small to medium-sized company deals, while Merrill focuses on big corporations.

Goldman Sachs is the No. 1 adviser on energy mergers announced in 2006, with a 30 percent market share, according to Bloomberg data. Petrie Parkman is No. 11, with a 6.8 percent share, and Merrill is 13th with 3.5 percent. Combined, Merrill and Petrie Parkman would rank No. 8.

Petrie Parkman's team of stock analysts also will join Merrill.

Merrill has been rebuilding its energy business; it had exited energy trading after the Enron collapse. In 2004, the Wall Street firm bought the energy trading businesses of Entergy-Koch LP for an undisclosed price.

Petrie Parkman was founded in 1989 after Petrie and James Parkman left First Boston Corp. The firm earned $4.2 million on revenue of $74.3 million in 2005. It has 53 employees and offices in Denver and Houston.

Recently, it acted as an adviser in the $5.3 billion sale of Denver-based Western Gas Resources to Anadarko Petroleum.

Before co-founding Petrie Parkman, Petrie was senior oil analyst at First Boston, where he was ranked the No. 1 oil analyst for eight straight years by Institutional Investor magazine.

Following the acquisition, which is expected to close by the end of the year, Petrie will become a vice chairman of Merrill Lynch.

Q & A with Thomas Petrie

Following are edited excerpts of an interview Monday with Thomas Petrie, whose Petrie Parkman & Co. energy industry investment bank agreed to be sold to Merrill Lynch.

• Is this energy boom more sustainable than the one in the 1970s and early 1980s?

This one is much more sustainable. We're dealing with a combination of resource maturity in terms of the existing producing base and geopolitical complexity. As a result, energy and the challenges of developing new energy - relative to what the world needs for economic growth - is going to be among the top two or three drivers for our economic future for the balance of this decade and well into the next.

• Do you see oil prices dropping much in the future?

There will be volatility because commodities are inherently volatile. There will be backing and filling. And that's what we're getting right now in oil. But the big move of this decade has been from $18 to $20 oil to $60 to $70 oil. And much of that move is going to stay with us.

• Do you think the rapid pace of merger activity in the oil business will continue?

The whole reconfiguring of this industry is going to continue: the need to raise new money; the need to figure out logical combinations of companies; the need to create new companies. That's all a part of the picture.

fillionr@RockyMountainNews.com or 303-954-2467

Subscribe to the Rocky Mountain News