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Exhibit P8-11.

You have recently been hired as an equity analyst by Wall Street Valuation Consultants and have been assigned the task of valuing the proposed acquisition described in the following press release:

Houston, Texas (December 12, 2005) -- ConocoPhillips (NYSE: COP) and Burlington Resources Inc. (NYSE: BR) announced today they have signed a definitive agreement under which ConocoPhillips will acquire Burlington Resources in a transaction valued at $33.9 billion. The transaction, upon approval by Burlington Resources shareholders, will provide ConocoPhillips with extensive, high quality natural gas exploration and production assets, primarily located in North America. The Burlington Resources portfolio provides a strong complement to ConocoPhillips' global portfolio of integrated exploration, production, refining, and energy transportation operations, thereby positioning the combined company for future growth. (Source: http://www.conocophillips.com/NR/rdonlyres/86E7B7A6-B953-4D0D-9B45-E4F1016DD8FD/0/cop_burlingtonpressrelease.pdf)

In his letter to ConocoPhillips shareholders contained in the company's 2005 annual report, CEO Jim Mulva described the rationale for the proposed Burlington acquisition as follows:

Burlington's near-term production profile is robust and growing, plus Burlington's possesses an extensive inventory of prospects and significant land positions in the most promising basins in North America, primarily onshore. With this access to high-quality, long-life reserves, the acquisition enhances our production growth from both conventional and unconventional gas resources.

Specifically, our portfolio will be bolstered by opportunities to enhance production and gain operating synergies in the San Juan Basin of the United States and by an expanded presence and better utilization of our assets in Western Canada. In addition to growth possibilities, these assets also provide significant cash generation potential well into the future.

Beyond adding to production and reserves, Burlington also brings well-recognized technical expertise that, together with ConocoPhillips' existing upstream capabilities, will create a superior organization to capitalize on the expanded asset base. We do not anticipate that the $33.9 billion acquisition will require asset sales within either ConocoPhillips or Burlington, nor should it change our organic growth plans for the company. We expect to achieve synergies and pretax cost savings of approximately $375 million annually, after the operations of the two companies are fully integrated.

We anticipate immediate and future cash generation from this transaction that will aid in the rapid reduction of debt incurred for the acquisition and go toward the redeployment of cash into strategic areas of growth. Burlington shareholders will vote on the proposed transaction at a meeting on March 20, 2006. (Source: http://wh.conocophillips.com/about/reports/ar05/letter.htm)

However, at an analysts' meeting, CEO Mulva hinted that the price ConocoPhillips paid for Burlington might be viewed as high by some:

In terms of acquisitions, mergers and acquisitions, it really becomes more and more of a seller's market, and terms and conditions are not that attractive for buyer's. (Source: http://news.softpedia.com/news/ConocoPhillips-Plans-To-Acquire-Burlington-14628.shmtl)

Your task is to answer the following basic question: Is Burlington Resources worth the $35.6 billion offered by ConocoPhillips? Although you are new to the exploration and production (E&P) industry, you have quickly learned that the method of multiples, or market-based com parables, and specifically the ratio of enterprise value (EV) to EBITDAX are typically used as benchmarks to value E&P companies. EBITDAX stands for "earnings before interest, taxes, depreciation and amortization, and exploration expenses." EBITDAX differs from EBITDA in that it adds back exploration expenses in addition to depreciation and amortization -- hence the term "EBITDAX."

a) Using the method of multiples based on enterprise value to EBITDAX, the P/E ratio, and the enterprise value of EBITDA ratio, what should the acquisition price be for Burlington Resources shares? Use the following companies as com parables for your analysis: Chesapeake Energy, XTO Energy, Devon Energy, and Apache. Year-end 2004 balance sheets and income statement summary information as well as market capitalization data are provided in Exhibit P8-11.1 (pp. 304-307) for Burlington Resources and each of the comparable firms.

b) Which of the four firms used as com parables do you think is the best comparison firm for Burlington Resources? Why?

c) Based on your analysis of comparables, did ConocoPhillips pay too much or find a bargain? Explain your answer.

d) What additional information would help you with this analysis?
Exhibit P8-11.1 Income Statement and Balance Sheet Values ($ thousands) XTO Energy Chesapeake Energy Devon Energy Apache Burlington Resources Ticker XTO CHK DVN APA BR PERIOD ENDING 31-Dec-04 31-Dec-04 31-Dec-04 31-Dec-04 31-Dec-04 Income Statement ($000) Total revenue 1947601 2709268 9189000 5332577 5618000 Cost of revenue 436998 204821 1535000 946639 1040000 Gross profit 1510603 2504447 7654000 4385938 4578000 Operating Expenses Selling, general, and administrative 165092 896290 1616000 173194 215000 Depreciation, depletion, and amoritization 414341 615822 2334000 1270683 1137000 Others 11830 0 0 162493 640000 Operating income or loss 919281 992335 3704000 2779568 2586000 Income from Continuing Operations Total other income/expenses (net) 0 -20081 64000 857 0 Earnings before interest and taxes 919281 972254 3768000 2780425 2586000 Interest expense 93661 167328 475000 117342 282000 Income before tax 825620 804926 3293000 2663083 2304000 Income tax expense 317738 289771 1107000 993012 777000 Net income from continuing operations 507882 515155 2186000 1670071 1527000 Nonrecurring Events Effect of accounting changes 0 0 0 -1317 0 Net income 507882 515115 2186000 1668757 1527000 Preferred stock and other adjustments 0 0 -10000 -5680 0 Net income applicable to common shares 507882 515155 2176000 1663074 1527000 Balance Sheet ($000) Assets Current Assets Cash and cash equivelants 9700 6896 1152000 111093 217900 Short-term investments 14713 51061 968000 0 0 Net receivables 364836 477436 1320000 1022625 994000 Inventory 0 32147 0 157293 124000 Other current assets 47716 0 143000 57771 158000 Total current assets 436965 567540 3583000 1348782 3455000 Long-term investments 0 136912 753000 0 0 Property, plant, and equipment 5624378 7444384 19346000 13860359 1103300 Goodwill 0 0 5637000 189252 105400 Other assets 49029 95673 417000 0 202000 Deferred long-term asset charges 0 0 0 104087 0 Total assets 6110372 8244509 29736000 15502480 15744000 Liabilities Current Liabiliities Accounts payable 425173 872539 1722000 1158181 118200 Short/Current long-term debt 75534 91414 1378000 21273 2000 Other current liabilities 259 0 0 103487 41500 Total current liabilities 500966 963953 3100000 1282891 1599000 Long-term debt 2053911 3076405 7796000 2619807 3887000 Other liabilities 199753 107395 366000 1022880 851000 Deferred long-term liability charges 756369 933873 4800000 2372481 2396000 Total liabilities 3510999 5081626 16062000 7298059 8733000 Stockholders' Equity Preferred stock 0 490906 1000 98387 0 Common stock 3484 3169 48000 209320 5000 Retained earnings 1239553 262987 3693000 4017339 4163000 Treasury stock -24917 -22091 0 -97325 -2208000 Capital surplus 1410135 2440105 9087000 4106182 3973000 Other stockholders' equity -28882 -12193 845000 -129482 1078000 Total stockholders' equity 2599373 3162883 13674000 8204421 7011000 Total liabilities and stockholders' equity 6110372 8244509 29736000 15502480 15744000 Other Financial Data Exploration expenses (millions) 599.5 184.3 279 2300 258 Shares outstanding (millions) 332.9 253.2 482 327.5 392 Year-end 2004 closing price 35.38 16.5 38.92 50.57 Market capitalization (millions) 11788 4177.8 18759.44 16561.68
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