Oil-service company Cal Dive International Inc., Houston, (Nasdaq: CDIS) plans to acquire Dallas-based Remington Oil and Gas Corp. (NYSE: REM) in a cash and stock deal valued at approximately $1.4 billion. Remington stockholders will receive $27 in cash and 0.436 Cal Dive common share per Remington share, which values Remington shares at approximately $46.33 each, based on the pre-announcement Cal Dive closing price. At closing, the total net cost to Cal Dive will be reduced by the approximate $2 per share of cash Remington is expected to have on its balance sheet. The transaction is expected to be completed in the second quarter. Remington's core area is the Gulf of Mexico, including in deep water. As of year-end 2005, Remington had proved reserves of 280 billion cu. ft. of gas equivalent and identified prospects with risked reserves of more than 1.1 trillion equivalent. Remington's Dallas office will be maintained and all key management and operations personnel will become employees of Cal Dive upon closing. "The acquisition of Remington is the next key step in the evolution of Cal Dive's unique production-contracting-based business model," says Owen Kratz, Cal Dive chairman and chief executive. "Access to both deepwater hydrocarbon prospects and the available means to exploit them, as an operator, should lead to the continuation of our differentiated long-term earnings growth." Roger D. Read, oil-service analyst for Natexis Bleichroeder Inc., has raised his 2006 earnings estimates for Cal Dive 23 cents to $2.61. His new sum-of-parts analysis for Cal-Dive is $53 per share. "The significant free cash flows from operations and the disposal of noncore assets should lead to significant debt retirement by the end of 2007," Read adds. Simmons & Co. International and Banc of America Securities are advisors to Cal Dive, while Fulbright & Jaworski LLP is legal counsel. Randall & Dewey, a division of Jefferies & Co., was advisor to Remington.

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