Shell Canada to buy Duvernay Oil

Shell Canada has offered to acquire all of the outstanding shares of Duvernay Oil Corp. for $5.19 billion (Can.), and the Duvernay board voted unanimously to recommend that shareholders accept the offer.

July 14, 2008

2 min read

By OGJ editors
HOUSTON, June 14 -- Shell Canada has offered to acquire all of the outstanding shares of Duvernay Oil Corp. for $5.19 billion (Can.), and the Duvernay board voted unanimously to recommend that shareholders accept the offer.

Shell offered $83/share for Duvernay. Including the assumption of debt, the proposed total transaction would be $5.9 billion. Duvernay is a leading acreage holder in the Western Canadian Sedimentary Basin.

The offer remains subject to regulatory approvals and other conditions, including the tendering of at least two thirds of Duvernay's fully diluted share capital.

Duvernay has 450,000 acres of landholdings in two large gas project areas, Sunset-Groundbirch in British Columbia and the Alberta Deep basin. Both are characterized by multiple, extensive tight gas reservoirs.

The company reports more than 25,000 boe/d of production, predominantly gas. It plans to increase production to 70,000 boe/d by 2012. Duvernay owns and controls the natural gas processing and delivery infrastructure in both large project areas.

Royal Dutch Shell PLC, which has 80,000 boe/d of tight gas production in North America, has been building its acreage positions for future growth. Existing tight gas production is in Western Canada, Wyoming, and South Texas.

Shell also has acreage in the emerging Haynesville play in Louisiana and Texas.