AMOCO, DOW PLAN CANADIAN JOINT VENTURE.

Amoco Canada Petroleum Co. Ltd. and Dow Chemical Canada Inc. plan to form a joint venture to own and operate Canadian leases with a total productive capacity of 44,000 b/d of oil equivalent. A letter of intent signed by both companies calls for shares in the new joint venture company to be sold to the public by mid-1994. Amoco and Dow would then dispose of their interests by Dec. 31, 1996. At least 70% of the shares are to be sold to Canadians.

Sept. 2, 1991

2 min read

Amoco Canada Petroleum Co. Ltd. and Dow Chemical Canada Inc. plan to form a joint venture to own and operate Canadian leases with a total productive capacity of 44,000 b/d of oil equivalent.

A letter of intent signed by both companies calls for shares in the new joint venture company to be sold to the public by mid-1994. Amoco and Dow would then dispose of their interests by Dec. 31, 1996.

At least 70% of the shares are to be sold to Canadians.

As part of its 1988 acquisition of Dome Petroleum Ltd., Amoco Canada has agreed with a federal agency, Investment Canada, to sell 20% of the equity of Amoco Canada within 10 years of the Dome purchase. A partial sale is to be completed within 5 years.

"As that deadline approaches, we realize that Amoco Canada will not be in a financial position to effect the sale," said T. Don Stacy,

Amoco Canada chairman and president. "The debt-and consequently our debt to equity ratio-is simply too high to sell shares to the public.

"The intent of the Investment Canada requirement was to increase Canadian ownership of the oil and gas industry. With that in mind, we proposed an alternative to our original commitment that would achieve the same degree of Canadian ownership."

Dow subsidiary Maligne Resources Ltd. and Amoco Canada will each contribute leases to the new company.

Maligne owns interests in about 25,000 wells in Alberta, British Columbia, and Saskatchewan. The new company's leases will be more geographically concentrated and will have higher working interests than Maligne's interests.

"Dow Canada's objective of ultimately divesting its interest in Maligne will be well served through the joint venture," said Denis Wilcock, Dow Canada president.

The venture's producing leases are expected to include those in the Brooks area of Southeast Alberta, the Wembley-Valhalla area northwest of Grande Prairie, and Hoadley and Medicine River in western Alberta.

The partners also will assign undeveloped leases to give the new company a base for exploration.