I am disappointed that Wyoming was not the ultimate buyer of the Union
Pacific Land Grant lands and minerals. We worked hard to prepare a
responsible bid, which we believe would have augmented Wyoming’s
investment returns, bringing in more revenue at a critical financial time and
helping to keep taxes in Wyoming low. It also would have provided many
other benefits to Wyoming citizens by making it easier to manage
checkerboard lands in southwestern Wyoming, furnishing more and better
public access for recreation and hunting, and given Wyoming more tools to
oversee development thereby assuring many compatible uses including
grazing, mining and all types of energy development. I thank Occidental
Petroleum (Oxy) for considering the State as an unconventional potential
buyer and for being patient with a complex but valuable public process.
All in all, taking the disciplined approach that we did, members of the State
Loan and Investment Board (SLIB) offered $1.2 billion for the entirety of the
Oxy property, and in the alternative, $225 million for the land and all
minerals other than trona. Our bid was carefully researched and shared with
the leadership of the Legislature and members of the State Loan and
Investment Board before being put forward by Treasurer Meier and myself.
Opportunities like this one do not come around often and need careful
consideration. That was why we brought it to the attention of the Legislature
during the last budget session and why they spent as much time as they did
evaluating the proposition.

 In the end, both the Legislature and the Executive branches decided that
pursuing this purchase was an appropriate thing to do for the future of the
people of Wyoming. From the beginning, there was strong support from the
legislative and the state-wide elected leaders. Communication between the
branches has been constant and consistent. Moreover, there was never any
doubt that any decision to pursue the sale would be fully and publicly
disclosed. Furthermore, any presumed offer would be squarely based upon its
investment potential for the state as determined by a solid and thorough
analysis. Many concerns were well vetted in legislative deliberations last
February. The decision to go forward or not was ultimately resolved in
SF0138, which passed both houses.
Many of the elements of that legislation called attention to public process,
transparency, information on the nature and cost of the purchase, what
portfolios should house which portions of the asset, where revenues would
go, how assets would be managed and so on. Although I vetoed the bill in
March, I committed to follow to the greatest extent possible the parameters
laid out in the bill. The bill simply described a process that was unwieldy and
inefficient. Moreover, most of the provisions either recommended what
should happen if we were able to purchase the asset or what we should do
before purchasing it. Our bid was not a purchase, it simply was an invitation - if accepted -- to start negotiating a “Purchase and Sale Agreement” or PSA.
Moving forward as the SLIB did was not a way to short circuit any of these
considerations.

 Our task was to evaluate the investment potential of the asset and determine
whether, and at what price, a bid should be made. As such, our bid was based
on the well-researched analysis of the asset and a well-reasoned estimation of
what it could add to our portfolios. Importantly, our analysis was focused on
the value of the marketable aspects of the proposed purchase, not supposed
adjunct benefits such as improved public access or easier management. Nor
did the review anticipate revenues from renewable energy development in the
area. The development potential of wind and solar is not fully understood at
this juncture, thus estimating tax revenue from that source would be highly
speculative. Our analysis furthermore considered the added costs of
management, making up for lost tax revenue for counties, possible
environmental liabilities, and the potential for other unforeseen
complications. Our evaluation was not influenced by conjecture about
potential resale of any of the assets. It was simply an ‘as is’ analysis of return
and cash-flow.
To effect that analysis, the State sought the wisdom of several individuals
with insight and experience in all aspects of the proposed sale: from our own
Geological Survey, Treasurer’s Office, and Office of State Lands to long time
friends of Wyoming like Greg Hill (Hess), Chad Deaton (Baker-Hughes),
Bob King (former OGCC Supervisor) and Steve Farris (Apache) for oil and
gas, to Fred Parady (FMC Trona), and Jim Taylor (Hall and Hall Ranch Real
Estate) for other aspects of the sale. All advised the State to seek the
assistance of an investment bank before proceeding.

 Accordingly, we spoke to Jeffries, Citi Bank, Tudor Pickering, Holt, and
Barclays, most of whom had knowledge of this asset. All had experience with
and were qualified to value a transaction as large as this one would be. Bids
to advise the State were submitted from three finalists. Our decision was not
based on price alone, nor was it influenced by any one individual. The
decision was made by a collective assessment of all the advisors of which
bank would be most able to provide the best and most comprehensive
valuation of the asset for the State.
No other state has ever contemplated a purchase such as this one and the
public process enshrined in statute posed additional hurdles for any legal
arrangement that a private sector concern might be accustomed to.
Ultimately, in consultation with Attorney General Hill, we negotiated an
agreement with Barclays wherein they would analyze the asset for a set fee
(in this case $2.5 million) with additional consideration should our purchase
be successful.
Barclays provided us with a robust analysis and a range of returns for given
prices. This material was then presented to the Investment Funds Committee
(IFC) for their consideration and recommendation to the SLIB. Their
recommendation was not unanimous but did offer additional perspective on
an appropriate offer range and suggestions on component parts. The IFC’s
analysis also pointed out potential dangers such as concentration risk and the
possibility of purchasing someone else’s PR risks.

 The SLIB met and considered the full advice of the IFC, the thoughts of the
special advisors assembled to assess the asset and the advice given by others,
the analysis of Barclays, as well as a robust review by RVKuhns, Wyoming’s
investment consultant, and, last, but certainly not least, public comment from
the people of Wyoming. SLIB decided to authorize a bid starting at $1.05
billion all-in and $225 million without trona. Later, within the parameters set
by the SLIB, Treasurer Meier and I raised Wyoming’s bid to $1.2 billion -slightly below the SLIB’s highest authorized range allowing for the addition
of closing costs, etc., necessary to complete the purchase.
If we had been able to purchase the asset at the price we offered, our review
suggested that the State could anticipate a rate of return in the range of 8% to
12%, depending on the assets and how quickly the economy would recover.
This predicted rate of return is currently better than our current average rate
of return.
“We felt the purchase would have been a good investment at the bid we
submitted,” Treasurer Curt Meier said. “However, we believe our existing
investment opportunities will also serve the needs of the State and its
constituents. Exceeding our target bid was a risk we were not willing to
take.”

This was a once in a generation opportunity. It is very different for a State to
be involved in a sale of private assets of this magnitude and Oxy should be

 thanked for establishing an approach that allowed for Wyoming to
participate. Today we withdrew our bid.

While we are not the successful bidder, all was done in good faith. In the end,
we are delighted to welcome Orion Mine Finance to Wyoming and look
forward to a constructive relationship with them.