The acquisition would give ConocoPhillips, the nation's third-largest oil company, control of important natural-gas exploration areas in the United States, where Burlington has been using new drilling technologies in its search for new reserves. Other major oil companies, including ExxonMobil and Royal Dutch Shell, have been moving aggressively in recent months to increase their own natural-gas production in this country.
The negotiations come against a backdrop of soaring natural-gas prices around the nation following hurricanes this year that knocked out production at platforms in the Gulf of Mexico. Frigid temperatures in some parts of the country in recent days have pushed prices even higher. Last week, natural gas prices reached more than $15 per thousand cubic feet in trading, a near record. Talks between ConocoPhillips and Burlington are near completion, the executives said, but they warned that it was still possible the negotiations could collapse. If a deal is reached, it could be announced as early as this week. Details of the terms of the transaction under discussion could not be learned.
Burlington, based in Houston, has more than 2,200 workers. The company has about 12 trillion cubic feet equivalent of natural-gas reserves, mostly in North America. However, the acquisition would also help ConocoPhillips internationally, expanding its reach in countries like Ecuador and Canada where Burlington has made inroads.
A spokesman for Burlington declined to comment. A representative for ConocoPhillips could not be reached.
ConocoPhillips, a company formed through a string of earlier mergers, has been using acquisitions to help it grow. In late November, for instance, it acquired an oil refinery in Germany from a private concern, Louis Dreyfus, in a deal valued at about $2.5 billion, according to Deutsche Bank.
The transaction also signals an ambition by the chief executive of ConocoPhillips, James J. Mulva, to eventually secure a seat at the table with the elite international energy companies like ExxonMobil, Chevron, BP and Royal Dutch Shell. ConocoPhillips is the largest energy company in Houston, but it has been unable to attain the extensive international reach of its larger competitors.
The deal is expected to ignite interest in similar transactions in Houston, which has recently seen a jump in merger activity because of rising oil and natural-gas prices. The higher prices, coupled with difficulty at larger companies in discovering large new petroleum reserves, have encouraged some companies to consider acquisitions as a way of getting access to new areas of production and refining.
A deal with ConocoPhillips would also keep a foreign company from buying Burlington, though it is still possible one could submit a bid in the next several days. When Cnooc, a Chinese state-owned oil company, attempted to acquire Unocal earlier this year, it touched off a political firestorm in this country.
Cash to finance such deals is not an issue. ConocoPhillips, for instance, had net income of $3.80 billion in the most recent quarter, up from $2.01 billion from the same period a year earlier. Revenue at the company was $49.66 billion, compared with $34.74 billion in the year-earlier period. Earnings at other large energy companies are expected to remain near record levels through the end of this year.
ConocoPhilips could be buying Burlington at the height of the market, analysts said. As natural-gas prices have soared, so have Burlington's shares - they have almost doubled in the past year. The stock closed at $76.09 on Friday. Shares of ConocoPhillips, which have also risen, closed at $63.07.