Suncor Energy Inc. and Petro-Canada, both of Calgary, have agreed to merge the two companies in a $19.3 billion (Can.) transaction. The resulting company, Suncor, will have 7.5 billion boe of proved and probable reserves with existing production of 680,000 boe/d.
In other recent company news:
- Korea National Oil Corp. and Colombia’s state-run Ecopetrol acquired Offshore International Group, Houston, whose main asset is Petro-Tech Peruana SA, for $900 million. KNOC and Ecopetrol split the purchase price equally.
- The third stage of the coalseam methane (CSM) alliance between Shell Exploration Co. BV and Arrow Energy Ltd., Brisbane, has been completed.
Suncor, Petro-Canada merger
Suncor will become the largest holder of oil sands properties for both mined and in-situ resource recovery. It also will hold assets in every major oil development project on Canada’s East Coast. International holdings involve oil and natural gas production from the North Sea, North Africa, and Latin America.
The combined company will have refining capacity of 433,000 b/d, Suncor said.
Completion of the proposed merger depends upon approval by Suncor and Petro-Canada shareholders, as well as regulatory approvals from the Canada government. Suncor and Petro-Canada anticipate closing the transaction during the third quarter.
Suncor Pres. Rick George will continue as president for the combined company. Upon completion of the proposed transaction, Suncor’s existing shareholders will own 60% and Petro-Canada shareholders will own 40% of the merged company.
Terms call for Petro-Canada common stockholders to receive 1.28 common shares of the merged company for each common share of Petro-Canada they own. Each Suncor common stockholder will receive one common share of the merged company for each common share of Suncor they own.
Ron Brenneman, Petro-Canada president and chief executive officer, will assume the role of executive vice-chairman in the merged company.
The two companies estimate the resulting company can cut existing operating expenditures by $300 million/year through efficiencies in overlapping operations, streamlining business practices, and improved logistics.
The companies also expect to achieve capital efficiencies of $1 billion/year through elimination of redundant spending and targeting capital budgets to high-return, near-term projects.
The merged company’s board is expected to comprise 12 directors, including eight members from Suncor’s current board and four members from Petro-Canada’s current board. John Ferguson, Suncor Energy chairman, will serve as chairman of the merged company.
The boards of both companies approved the proposed merger.
KNOC, Ecopetrol deal
KNOC and Ecopetrol set a goal to more than double production within 3 years. Current production is 12,000 b/d.
Petro-Tech Peruana began operating in January 1994 on Block Z2B along Peru’s northern coast. Its proved and probable reserves are estimated at more than 100 million bbl. The company holds one producing and 10 exploration blocks in Peru.
Shell, Arrow alliance
Arrow and Shell pledged to develop Arrow’s estimated 70 tcf of gross CSM resources on its permits in Queensland through an LNG project at Gladstone on the central east Queensland coast.
Shell will provide world-class expertise in LNG technology, plant design, construction, and marketing. Arrow received the last of the up-front payments of $155 million, which brings the company’s total amount received to date to $454 million.
Arrow seeks to accelerate its LNG exports, which would create hundreds of jobs and position the company as a dominant player in the global CSM market.
