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Shell seen raising offer
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March 9, 2001: 8:55 a.m. ET
Analysts expect Anglo-Dutch oil firm to raise $2.2bn bid for gas firm Barrett
By CNN Business Writer Tara Duffy
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LONDON (CNN) - Royal Dutch/Shell could enter a bidding war for Barrett Resources after the natural gas firm rejected its bid, analysts told CNN on Friday.
The Anglo-Dutch firm, the world's second largest oil and gas company, will put up a fight for the Denver-based gas producer, seen as a key step to building its position in the growing natural gas market, analysts said.
Shell could be forced to increase its offer if other companies bid for Barrett, which late Thursday shunned Shell's $2.2 billion offer and invited other companies to make competitive bids.
"This is not a lot of money for Shell, but Barrett is something they see could form the basis of the U.S. natural gas business and that they could still grow without too much antitrust concern," Jurjen Lunshof, an analyst at Credit Lyonnais Securities, told CNN.
Shell executives declined immediate comment on Barrett's rejection.
 Shares in Shell Transport & Trading, the London-listed, UK part of the company, gained 0.8 percent to touch 584 pence in afternoon trade. Royal Dutch shares were up 0.4 percent at  64.77 in Amsterdam.
Shell on Wednesday proposed a cash acquisition of Barrett Resources at a price of $55 per share and said it would launch an offer for all outstanding shares if Barrett's board did not agree to the proposal. In addition to the cash offer, Shell said it would assume some $400 million in debt.
Shell, which has been trying to build up its gas assets, is also trying to complete gas purchases of New Zealand's Fletcher Challenge Energy and Woodside Petroleum in Australia, where it has run into political opposition.
"We're looking at a situation where gas is going to become extremely important going forward. Shell is trying to pre-empt this and establish a strong position in a market that is going to use gas as a way of filling some of the energy gaps," Lunshof said.
Barrett Resources' stock closed 11 cents firmer at $61.22 on Thursday, before the company released its statement. On Wednesday the stock rose 11 percent above Shell's offer price to $61.11.
Other bidders are likely to include Anadarko Petroleum Corp. (APC: Research, Estimates), Lunshof said.
"Shell would be prepared to go a lot further in order to secure this. It's not just picking up yet another package of assets. They want to use this to build something on," he added.
Shell, like many oil companies, faces the daunting task of reinvesting its big cash pile, accumulated as crude oil prices climbed to a ten year high of around $35 a barrel in October. 
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