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What’s $16.4 billion to Terry Kee? Over the course of 26 years representing ChevronTexaco, the Pillsbury Winthrop Shaw Pittman partner has become accustomed to monstrous mergers involving the San Ramon, Calif.-based oil giant. So working on Chevron’s acquisition of fellow oil giant Unocal Corp. was old hat. “I’ve been involved in working with that client for my whole career,” Kee said. In 1984, that meant helping Chevron buy Gulf Corp. for $13.3 billion, at the time one of the largest mergers in U.S. history. And in 2000-01 it was the acquisition of Texaco for nearly $40 billion. For Kee and his client, the $16.4 billion Unocal deal was just one more step in a decades-long growth spurt. “There are few companies in the world that are larger than Chevron,” Kee said. If industry analysts are right, that number will grow smaller — and Kee will grow busier — as oil companies continue a new wave of consolidation spurred by rising oil prices. Kee did not want to discuss the details of the Unocal acquisition (which is awaiting SEC approval) or the prospects of similar deals. But he said that oil industry transactions generally involve big money, big companies and big personalities. “There are highly technical aspects,” he said. “And it’s an industry that’s had a lot of larger-than-life characters, going back to John D. Rockefeller.” Pavel Molchanov, an oil industry analyst with Raymond James & Associates in Houston, said he expects high crude prices to lock big oil companies in a tight competition to buy smaller firms. And that means more work for their law firms. The biggest industry change, Molchanov said, is that historically conservative integrated petroleum companies like Chevron — which has operations in all aspects of the industry, from exploration to retail gasoline sales — are suddenly confident that crude oil prices will continue to rise. “A year ago, $40 [per barrel] oil would have seemed very improbable in the near term,” said Molchanov. “But we’re there. We’ve been above $40 since July.” This doesn’t bode well for consumers, he added, as high crude prices means higher costs at the pump. “By making this bold strategic move,” Molchanov said, Chevron “made a call that gasoline prices, which are effectively based on the prices of crude oil, will continue increasing.” And Chevron wasn’t the only major company looking to buy. Molchanov said it was engaged in a tight bidding war with Chinese and Italian competitors to buy Unocal. Due in part to its sheer size, the merger involved the services of several law firms and a host of attorneys. Along with Kee, San Francisco-based Pillsbury partners Robert James and David Lamarre, counsel Alfred Pepin and associates David Koeninger, Brian Wong, Amy Smolen and Jessica Hackman, plus several New York Pillsbury attorneys, worked on the deal. ChevronTexaco was also represented by in-house counsel and lawyers with Jones Day and McDermott, Will & Emery. Unocal was represented by lawyers with Wachtell, Lipton, Rosen & Katz in New York.

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