Imperial Oil Ltd., a Toronto-based unit of ExxonMobil Corp., and ExxonMobil unit Mobil Oil Canada Ltd., Calgary, agreed to share common business and operational support services and jointly pursue new oil and natural gas opportunities in Canada, Imperial announced Wednesday. The companies expect to realize combined annual savings of about $40 million.
Under agreements effective Nov. 15, the companies will remain separate entities, with each continuing to operate their own assets in western Canada. But they will share specialist and technical services in selected areas.
Mobil Canada would operate any new opportunities that may be developed in eastern Canada, while Imperial would operate new developments in northern Canada. Shared services groups will be combined within Imperial to provide upstream business and marketing services to both companies.
The agreements are the result of a previously announced study into potential benefits of closer cooperation between the two companies.
In August, the companies said they might combine some upstream operations to achieve economies of scale and cut costs by sharing common business and operational support services. They also said they would jointly seek out Canadian exploration opportunities (OGJ Online, Aug. 16, 2000).
"Recognizing that the overlap in existing operations between the two companies is minimal, this arrangement is expected to increase the cost competitiveness of both and strengthen our ability to pursue future opportunities," said K.C. Williams, a senior vice-president and director of Imperial.
Up to 270 permanent and contract positions will be eliminated through the changes. Mobil Canada also will change its name to ExxonMobil Canada.