2010-07-09-2010-07-07-2010-07-07
To acquire UTS Energy and 20% interest in the Fort Hills asset in the Athabasca region.
Total E&P Canada Ltd., a subsidiary of French oil major Total SA (NYSE: TOT), plans to acquire UTS Energy Corp., Calgary, (Toronto: UTS) and its 20% interest in the Fort Hills asset in the Athabasca region of Alberta, Canada for C$1.15 billion.
UTS will transfer its assets, excluding its 20% Fort Hills interest, to a newly formed company and Total E&P Canada will pay a cash amount of C$3.08 per share to acquire UTS. Taking into account the cash held by UTS and acquired by Total (C$355 million, equivalent to C$0.73 per share) the cost of the acquisition for Total amounts to approximately C$1.15 billion (C$2.35 per share).
The Fort Hills project is operated by Calgary-based Suncor Energy Inc. (NYSE, Toronto: SU) with a 60% interest, the remaining 20% held by Teck Resources Ltd. The most recent estimates put Fort Hills' resources at around 3.4 billion barrels of bitumen, which will be recovered through open-pit mining. The project will be developed in two phases. The first phase of approximately 160,000 barrels per day has already obtained the necessary administrative approvals to launch the development in the near future with a target production start-up, as expected by Total, in 2015-2016.
The earn-in costs owed to UTS by its Fort Hills partners (approximately C$704 million) will be transferred to Total. The net acquisition cost to Total for approximately 680 million barrels of resources is C$0.65 per barrel.
Parallel to this transaction, Total is considering divesting some of its interest in the Joslyn mine, while retaining its role as operator, with the objective of an approximately 50% stake.
Total president Yves-Louis Darricarrère says, "Total is very pleased with this acquisition of a high-quality asset that will allow us to strengthen and reorganize our asset portfolio in the Canadian oil sands. With Suncor Energy, we will benefit from the experience of a leading partner, whose expertise in the mining operation of oil sands is well recognized."
UTS' board has unanimously recommended the agreement. Under a Plan of Arrangement, UTS will recommend that its shareholders approve Total's acquisition of the company.